UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________

FORM 10-Q

~~_____________________________________________~~

~~(Mark One)~~____________________________________________



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

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

2020



¨☐	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	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~~1,040,169,324 common ~~units and 8,307,473 general partner~~ units outstanding at October ~~27, 2017.~~

29, 2020.

~~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	4339
Item 3. Quantitative and Qualitative Disclosures about Market Risk	6566
Item 4. Controls and Procedures	6667

PART II – OTHER INFORMATION
Item 1. Legal Proceedings	67
Item 1A. Risk Factors	67
~~Item 2. Unregistered Sales of Equity Securities~~	68
Item ~~5. Other Information~~2. Unregistered Sales of Equity Securities	68
Item 6. Exhibits	7069
Signatures	7271

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~~
~~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
Merger	MPLX acquisition by merger of Andeavor Logistics LP (“ANDX”) on July 30, 2019
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 ~~prior to the date~~ of ~~its acquisition, March 31, 2016, effective January 1, 2015.~~ ~~- HST’s, WHC’s and MPLXT’s related assets, liabilities and results of operations~~ANDX prior to the date of the ~~acquisition, March~~Merger, July 30, 2019, effective October 1, ~~2017, effective January 1, 2015 for HST and WHC and April 1, 2016 for MPLXT.~~ 2018
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~~Wholesale Exchange	~~West Texas Intermediate~~The transfer to MPC of the Western wholesale distribution business, which MPLX acquired as a result of its acquisition of ANDX on July 31, 2020.

Table of Contents

Part I—Financial Information

Item 1. Financial Statements

MPLX LP

Consolidated Statements of Income (Unaudited)



	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per unit data)	2020		2019		2020			2019
Revenues and other income:
Service revenue	$	604	$	632	$	1,779		$	1,865
Service revenue - related parties	909		899		2,694			2,549
Service revenue - product related	41		26		102			86
Rental income	102		99		296			291
Rental income - related parties	241		293		712			904
Product sales	165		171		454			576
Product sales - related parties	37		32		100			109
Income/(loss) from equity method investments⁽¹⁾	83		95		(1,012		)	255
Other income	2		2		5			6
Other income - related parties	63		31		190			84
Total revenues and other income	2,247		2,280		5,320			6,725
Costs and expenses:
Cost of revenues (excludes items below)	323		407		1,006			1,099
Purchased product costs	152		129		374			489
Rental cost of sales	33		37		101			103
Rental cost of sales - related parties	32		45		119			124
Purchases - related parties	297		303		853			894
Depreciation and amortization	346		302		992			916
Impairment expense	0		0		2,165			0
General and administrative expenses	96		102		289			293
Restructuring expenses	36		0		36			0
Other taxes	33		29		94			84
Total costs and expenses	1,348		1,354		6,029			4,002
Income/(loss) from operations	899		926		(709		)	2,723
Related party interest and other financial costs	0		5		4			8
Interest expense (net of amounts capitalized of $8 million, $13 million, $31 million and $36 million, respectively)	207		212		624			640
Other financial costs	17		16		49			38
Income/(loss) before income taxes	675		693		(1,386		)	2,037
Provision for income taxes	1		4		1			2
Net income/(loss)	674		689		(1,387		)	2,035
Less: Net income attributable to noncontrolling interests	9		8		24			20
Less: Net income attributable to Predecessor	0		52		0			401
Net income/(loss) attributable to MPLX LP	665		629		(1,411		)	1,614
Less: Series A preferred unit distributions	20		20		61			61
Less: Series B preferred unit distributions	10		7		31			7
Limited partners’ interest in net income/(loss) attributable to MPLX LP	$	635	$	602	$	(1,503	)	$	1,546
Per Unit Data (See Note 6)
Net income/(loss) attributable to MPLX LP per limited partner unit:
Common - basic	$	0.61	$	0.61	$	(1.43	)	$	1.78
Common - diluted	$	0.61	$	0.61	$	(1.43	)	$	1.78
Weighted average limited partner units outstanding:
Common - basic	1,046		974		1,054			855
Common - diluted	1,047		975		1,054			855

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~~The nine months ended September 30, 2020 includes $1,264 million of ~~HST, WHC and MPLXT from MPC.~~impairment expense. See ~~Notes 1 and 3.~~Note 4.

~~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 September 30,				Nine Months Ended September 30,
(In millions)	2020		2019		2020			2019
Net income/(loss)	$	674	$	689	$	(1,387	)	$	2,035
Other comprehensive income/(loss), net of tax:
Remeasurements of pension and other postretirement benefits related to equity method investments, net of tax	0		0		(1		)	1
Comprehensive income/(loss)	674		689		(1,388		)	2,036
Less comprehensive income attributable to:
Noncontrolling interests	9		8		24			20
Income attributable to Predecessor	0		52		0			401
Comprehensive income/(loss) attributable to MPLX LP	$	665	$	629	$	(1,412	)	$	1,615


~~(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)	September 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	28		$	15
Receivables, net	477			593
Current assets - related parties	591			656
Inventories	117			110
Other current assets	59			110
Total current assets	1,272			1,484
Equity method investments	4,081			5,275
Property, plant and equipment, net	21,615			22,145
Intangibles, net	991			1,270
Goodwill	7,657			9,536
Right of use assets, net	323			365
Noncurrent assets - related parties	675			303
Other noncurrent assets	48			52
Total assets	36,662			40,430
Liabilities
Current liabilities:
Accounts payable	140			242
Accrued liabilities	169			187
Current liabilities - related parties	364			1,008
Accrued property, plant and equipment	121			283
Long-term debt due within one year	307			9
Accrued interest payable	207			210
Operating lease liabilities	65			66
Other current liabilities	158			127
Total current liabilities	1,531			2,132
Long-term deferred revenue	291			217
Long-term liabilities - related parties	281			290
Long-term debt	20,042			19,704
Deferred income taxes	12			12
Long-term operating lease liabilities	258			302
Deferred credits and other liabilities	184			192
Total liabilities	22,599			22,849
Commitments and contingencies (see Note 21)
Series A preferred units	968			968
Equity
Common unitholders - public (393 million and 392 million units issued and outstanding)	9,436			10,800
Common unitholder - MPC (647 million and 666 million units issued and outstanding)	2,827			4,968
Series B preferred units (.6 million and .6 million units issued and outstanding)	601			611
Accumulated other comprehensive loss	(16		)	(15		)
Total MPLX LP partners’ capital	12,848			16,364
Noncontrolling interests	247			249
Total equity	13,095			16,613
Total liabilities, preferred units and equity	$	36,662		$	40,430

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)



	Nine Months Ended September 30,
(In millions)	2020			2019
Increase/(decrease) in cash, cash equivalents and restricted cash
Operating activities:
Net (loss)/income	$	(1,387	)	$	2,035
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Amortization of deferred financing costs	44			29
Depreciation and amortization	992			916
Impairment expense	2,165			0
Deferred income taxes	(1		)	1
Asset retirement expenditures	0			(1		)
Loss/(gain) on disposal of assets	1			(3		)
Loss/(income) from equity method investments⁽¹⁾	1,012			(255		)
Distributions from unconsolidated affiliates	350			379
Changes in:
Current receivables	69			38
Inventories	(8		)	(3		)
Fair value of derivatives	1			(4		)
Current accounts payable and accrued liabilities	(27		)	(81		)
Current assets/current liabilities - related parties	36			(148		)
Right of use assets/operating lease liabilities	(2		)	6
Deferred revenue	85			58
All other, net	6			23
Net cash provided by operating activities	3,336			2,990
Investing activities:
Additions to property, plant and equipment	(982		)	(1,720		)
Acquisitions, net of cash acquired	0			6
Disposal of assets	54			14
Investments in unconsolidated affiliates	(244		)	(494		)
Distributions from unconsolidated affiliates - return of capital	112			2
All other, net	0			3
Net cash used in investing activities	(1,060		)	(2,189		)
Financing activities:
Long-term debt - borrowings	5,990			8,674
- repayments	(5,372		)	(7,423		)
Related party debt - borrowings	4,870			7,708
- repayments	(5,464		)	(7,583		)
Debt issuance costs	(23		)	(20		)
Distributions to noncontrolling interests	(26		)	(20		)
Distributions to Series A preferred unitholders	(61		)	(61		)
Distributions to Series B preferred unitholders	(41		)	(21		)
Distributions to unitholders and general partner	(2,162		)	(1,731		)
Distributions to common and Series B preferred unitholders from Predecessor	0			(502		)
Contributions from MPC	34			52
Contributions from noncontrolling interests	0			94
All other, net	(8		)	(12		)
Net cash used in financing activities	(2,263		)	(845		)
Net increase/(decrease) in cash, cash equivalents and restricted cash	13			(44		)
Cash, cash equivalents and restricted cash at beginning of period	15			85
Cash, cash equivalents and restricted cash at end of period	$	28		$	41


(1)	The 2020 period includes $1,264 million of impairment expense. See Note 4.

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			Series B Preferred Unit-holders			Accumulated Other Comprehensive Loss			Non-controlling Interests			Equity of Predecessor			Total
Balance at December 31, 2018	$	8,336		$	(1,612	)	$	0		$	(16	)	$	156		$	10,867		$	17,731
Net income (excludes amounts attributable to preferred units)	176			307			0			0			6			180			669
Distributions to:
Unitholders	(188		)	(327		)	0			0			0			(261		)	(776		)
Noncontrolling interests	0			0			0			0			(6		)	0			(6		)
Contributions from:
MPC	0			0			0			0			0			15			15
Noncontrolling interests	0			0			0			0			94			0			94
Other	2			0			0			1			0			0			3
Balance at March 31, 2019	8,326			(1,632		)	0			(15		)	250			10,801			17,730
Net income (excludes amounts attributable to preferred units)	168			293			0			0			6			169			636
Distributions to:
Unitholders	(191		)	(332		)	0			0			0			(241		)	(764		)
Noncontrolling interests	0			0			0			0			(6		)	0			(6		)
Contributions from:
MPC	0			0			0			0			0			13			13
Other	2			0			0			0			0			0			2
Balance at June 30, 2019	8,305			(1,671		)	0			(15		)	250			10,742			17,611
Net income (excludes amounts attributable to Series A preferred units)	222			380			7			0			8			52			669
Allocation of MPC's net investment at acquisition	2,983			7,199			615			0			0			(10,797		)	0
Distributions to:
Unitholders	(262		)	(432		)	(21		)	0			0			0			(715		)
Noncontrolling interests	0			0			0			0			(8		)	0			(8		)
Contributions from:
MPC	0			292			0			0			0			3			295
Conversion of Series A preferred units	36			0			0			0			0			0			36
Other	5			(1		)	0			0			0			0			4
Balance at September 30, 2019	$	11,289		$	5,767		$	601		$	(15	)	$	250		$	0		$	17,892

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			Series B Preferred Unit-holders			Accumulated Other Comprehensive Loss			Non-controlling Interests			Equity of Predecessor		Total
Balance at December 31, 2019	$	10,800		$	4,968		$	611		$	(15	)	$	249		$	0	$	16,613
Net (loss)/income (excludes amounts attributable to preferred units)	(1,022		)	(1,733		)	11			0			8			0		(2,736		)
Distributions to:
Unitholders	(271		)	(446		)	(21		)	0			0			0		(738		)
Noncontrolling interests	0			0			0			0			(9		)	0		(9		)
Contributions from:
MPC	0			225			0			0			0			0		225
Other	2			0			0			(1		)	0			0		1
Balance at March 31, 2020	9,509			3,014			601			(16		)	248			0		13,356
Net income (excludes amounts attributable to preferred units)	229			388			10			0			7			0		634
Distributions to:
Unitholders	(270		)	(458		)	0			0			0			0		(728		)
Noncontrolling interests	0			0			0			0			(8		)	0		(8		)
Contributions from:
MPC	0			6			0			0			0			0		6
Other	1			1			0			0			0			0		2
Balance at June 30, 2020	9,469			2,951			611			(16		)	247			0		13,262
Net income (excludes amounts attributable to preferred units)	236			399			10			0			9			0		654
Distributions to:
Unitholders	(271		)	(445		)	(20		)	0			0			0		(736		)
Noncontrolling interests	0			0			0			0			(9		)	0		(9		)
Contributions from:
MPC	0			13			0			0			0			0		13
Wholesale Exchange	0			(90		)	0			0			0			0		(90		)
Other	2			(1		)	0			0			0			0		1
Balance at September 30, 2020	$	9,436		$	2,827		$	601		$	(16	)	$	247		$	0	$	13,095

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 (collectively, the “Partnership”) 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.subsidiaries. References to “MPC” refer collectively to Marathon Petroleum Corporation as our sponsor and its subsidiaries, other than the Partnership. We are engaged in the transportation, storage and distribution of crude oil, asphalt and refined petroleum products; the gathering, processing and transportation of natural gas; and the 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~~2 segments based on the nature of services it offers: Logistics and Storage (“L&S”), which ~~is focused on~~relates primarily to crude oil, asphalt 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~~Merger.

On July 31, 2020, MPLX completed the exchange of Western Refining Wholesale, LLC (WRW”) to Western Refining Southwest, Inc. (“WRSW”), a wholly owned subsidiary of MPC, in exchange for the redemption of 18,582,088 MPLX common units held by WRSW (the “Wholesale Exchange”). See Note 3 for additional information regarding the Wholesale Exchange. These financial statements and related notes present the combined financial position, results 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 orinclude the results of WRSW through July 31, 2020.

Impairments – The outbreak of COVID-19 and its development into a pandemic in March 2020 resulted in significant economic disruption globally. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through social distancing have restricted travel, many business operations, ~~that would~~public gatherings and the overall level of individual movement and in-person interaction across the globe. Although there have ~~existed if Predecessor had~~ been ~~operated~~some signs of economic improvement, these events significantly reduced global economic activity and resulted in a decline in the demand for the midstream services we provide beginning with the first quarter of 2020. Macroeconomic conditions and global geopolitical events have also resulted in significant price volatility related to those aforementioned products.

The overall deterioration in the economy and the environment in which MPLX and its customers operate, as ~~an unaffiliated entity.~~

~~In preparing~~well as a sustained decrease in unit price, were considered triggering events resulting in impairments of the ~~Consolidated Statements~~carrying value of ~~Equity, net income attributable~~certain assets during the first quarter of 2020. We recognized impairments related to ~~MPLX LP is allocated to preferred unitholders based on a fixed distribution schedule, as discussed~~goodwill, certain equity method investments and certain long-lived assets (including intangibles), within our G&P segment. Many of our producer customers refined and updated production forecasts in ~~Note 8, and subsequently allocated~~response to the ~~general partner~~current environment, which impacted their current and ~~limited partner unitholders. Distributions, although earned, are not accrued until declared. However, when distributions~~expected future demand for our services, including the future utilization of our assets. Additionally, certain of our contracts have commodity price exposure, including NGL prices, which have experienced increased volatility as noted above. The table below provides information related to the ~~IDRs are made, earnings equal to~~impairments recognized during the ~~amount~~first quarter of 2020 as well as the corresponding footnote where additional information can be found. No additional events or circumstances arose during the second or third quarters of 2020 which would indicate the need for any additional impairment beyond those ~~distributions are~~recognized during the 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~~quarter.



(In millions)	Impairment		Footnote Reference
Goodwill	$	1,814	12
Equity method investments	1,264		4
Intangibles, net	177		12
Property, plant and equipment, net	174		11
Total impairments	$	3,429

Basis 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

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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.~~2019. The results of operations for the three and nine months ended September 30, ~~2017~~2020 are not necessarily indicative of the results to be expected for the full year.

In relation to the Merger described above and in Note 3, ANDX’s assets, liabilities and results of operations prior to the Merger are collectively included in what we refer to as the “Predecessor” from October 1, 2018, which was the date that MPC acquired Andeavor. MPLX’s acquisition of ANDX is considered a transfer between entities under common control due to MPC’s relationship with ANDX prior to the Merger. As an entity under common control with MPC, MPLX recorded the assets acquired and liabilities assumed on its consolidated balance sheets at MPC’s historical carrying value. For the acquiring entity, transfers of businesses between entities under common control require prior periods to be retrospectively adjusted for those dates that the entity was under common control. Accordingly, the accompanying financial statements and related notes of MPLX LP have been retrospectively adjusted to include the historical results of ANDX beginning October 1, 2018.

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 VIEs 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 and Series B 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

~~In October 2016,~~ASU 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments

Effective January 1, 2020, we adopted ASU 2016-13 using the ~~FASB issued~~modified retrospective transition method. This ASU requires entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. The ASU requires the company to utilize an ~~accounting standards update to amend the consolidation guidance issued~~expected loss methodology in ~~February 2015 to require that a decision maker consider, in the determination~~place of the ~~primary beneficiary, its indirect interest in a VIE held by a related party that is under common control on a proportionate basis only. The change was effective~~incurred loss methodology for ~~the~~ financial ~~statements for fiscal years beginning after December 15, 2016,~~instruments, including trade receivables, and ~~interim periods within those fiscal years. The Partnership was required to apply~~off-balance sheet credit exposures. Adoption of the standard retrospectively to January 1, 2016, the date on which the Partnership adopted the consolidation guidance issued in February 2015. The Partnership adopted this accounting standards update in the first quarter 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 it did not have a material impact on ~~the consolidated~~our financial statements.

~~Not Yet Adopted~~

~~In August 2017,~~We are exposed to credit losses, primarily as a result of 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 themidstream services that we provide. We assess each customer’s ability to ~~hedge nonfinancial and financial risk components, reduces complexity in fair value hedges~~pay through our credit review process, which considers various factors such as external credit ratings; a review 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 to determine liquidity, leverage, trends and business specific risks; market information; pay history and our business strategy. We monitor our ongoing credit exposure through timely review of customer payment activity. At September 30, 2020, we reported $477 million of accounts receivable, net of allowances of $4 million.

We also adopted 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 account 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.

In January 2017, the FASB issued an accounting standards update 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 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 of determining the impact of the accounting standards update 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~~following ASUs during the ~~period in the total~~first nine months 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 will2020, which did 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~~our financial statements 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.

In June 2016, the FASB issued an accounting standards update related to the accounting for credit losses on certain financial instruments. The guidance requires that for most financial assets, losses are 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 not expect application of this accounting standards update to have a material impact on the consolidated financial statements.

In February 2016, the FASB issued an accounting standards update requiring lessees to record virtually all leases on their balance sheets. The accounting standards update also requires expanded disclosures to help financial statement ~~users better understand the amount, timing~~disclosures:



ASU		Effective Date
2018-13	Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement	January 1, 2020
2020-04	Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	April 1, 2020

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3. Acquisitions and ~~uncertainty~~Dispositions

Wholesale Exchange

On July 31, 2020, MPLX entered into a Redemption Agreement (the “Redemption Agreement”) with WRSW, an Arizona corporation and wholly owned subsidiary of cash flows arising from leases. For lessors, this amended guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The change will be effective on a modified retrospective basis for fiscal years beginning after December 15, 2018, 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 and disclosures, internal controls and accounting policies. This evaluation process includes reviewingMPC, pursuant to which MPLX agreed to transfer to WRSW 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 statements as all operating leases will be recognized as a right of use asset and lease obligation. Based on results of the ~~evaluation process~~outstanding membership interests in WRW in exchange for the redemption of MPLX common units held by WRSW. The transaction effects the transfer to ~~date, the Partnership also believes the impact on existing processes, controls and information systems may be material.~~

In January 2016, the FASB issued an accounting standards update requiring unconsolidated equity investments, not accounted for under the equity method, to be measured at fair value with changes in fair value recognized in net income. The update also requires the useMPC of the exit price notion when measuring the fair value of financial instruments for disclosure purposes and the separate presentation of financial assets and liabilities by measurement category and form on the balance sheet and accompanying notes. The update eliminates the requirement to disclose the methods and assumptions used in estimating the fair value of financial instruments measured at amortized cost. Lastly, the accounting standards update requires separate presentation in other comprehensive income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when electing to measure the liability at fair value in accordance with the fair value option for financial instruments. The changes are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted only for guidance regarding presentation of the liability’s credit risk. The Partnership does not expect application of this accounting standards update to have a material impact on the consolidated financial statements.

In May 2014, 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 statesWestern wholesale distribution business 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 the first quarter of 2018. The Partnership plans to adopt the new standard using the modified retrospective method, which will result in a cumulative effect adjustment as 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.

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 revenuesMPLX acquired as a result of ~~implementation, specifically related to third-party reimbursements from customers and commodities received~~its acquisition of ANDX as ~~consideration in service agreements, such as keep-whole arrangements. In~~described below. Per 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~~terms 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 in the transaction price would have resulted in a gross up in 2016 and 2017 service revenue and cost of revenues between $300 million and $350 million annually, with no impact to net income. The Partnership will provide a summary of the total ASC 606 impact in the Annual Report on Form 10-K for the year ended December 31, 2017.

~~3. Acquisitions~~

~~Joint-Interest Acquisition~~

~~On September 1, 2017, the Partnership entered into a Membership Interests and Shares Contributions~~Redemption Agreement, MPLX redeemed 18,582,088 common units (the ~~“September 2017 Contributions Agreement”~~“Redeemed Units”) with MPLX GP LLC (“MPLX GP”), MPLX Logistics Holdings LLC (“MPLX Logistics”), MPLX Holdings Inc. (“MPLX Holdings”) and MPC Investment LLC (“MPC Investment”), each a wholly-owned subsidiary of MPC, whereby the Partnership agreed to acquire certain ownership interests 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 Partnership for an agreed upon purchase price of approximately $420 million in cash and equity consideration valued at approximately $630 million for total consideration of $1.05 billion (collectively, the “Joint-Interest Acquisition”).WRSW on July 31, 2020. The number of ~~common units representing the equity consideration~~Redeemed Units was ~~then determined~~calculated by dividing ~~the contribution amount~~WRW’s aggregate valuation of $340 million by the simple average of the ~~ten day trading~~ volume weighted average NYSE ~~price~~prices of aan MPLX common unit for the ten trading days ending at market close on ~~August 31, 2017.~~July 27, 2020. MPLX canceled the Redeemed Units immediately following the Wholesale Exchange. The ~~fair~~carrying value of the ~~common and general partner units issued~~net assets of WRW transferred to MPC was approximately ~~$653~~$90 million ~~based on the closing common unit price~~ as of ~~September 1, 2017, as~~July 31, 2020, resulting in $250 million being recorded onto “Common Unit-holder MPC” within the Consolidated Statements of Equity, in addition to the fair value of the redeemed units. Included within the $90 million carrying value of the WRW net assets was approximately $65 million of goodwill.

Acquisition of Andeavor Logistics LP

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 ~~total purchase price~~wholly owned subsidiary of ~~$1.07 billion. The equity issued consisted of: (i) 13,719,017~~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 to MPLX GP, (ii) 3,350,893 common units to MPLX Logistics and (iii) 1,441,224 common units to MPLX Holdings. The Partnership also issued 377,778 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 offshoreheld by certain affiliates 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 andMPC were converted into the ~~mid-continent region of the United States. Explorer owns and operates an approximate 1,830-mile~~right to receive 1.0328 MPLX 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~~units. See Note 7 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~~information 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. 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.~~ Merger.

Additionally, as a result of the Merger, each ANDX TexNew Mex Unit issued and outstanding immediately prior to the effective time of the Merger was converted into a right for WRSW, a wholly owned subsidiary of MPC, as the holder of all such units, to receive a unit representing a substantially equivalent limited partner interest in MPLX (the “MPLX TexNew Mex Units”). By virtue of the conversion, all ANDX TexNew Mex Units were cancelled and ceased to exist as of the effective time of the Merger. The MPLX TexNew Mex Units are a new class of units in MPLX substantially equivalent to the ANDX TexNew Mex Units, including substantially equivalent rights, powers, duties and obligations that the ANDX TexNew Mex Units had immediately prior to the closing of the Merger.

As a result of ~~this waiver, MPC did not receive approximately two-thirds~~the Merger, the ANDX Special Limited Partner Interest outstanding immediately prior to the effective time of the ~~distributions or IDRs that would have otherwise accrued~~Merger was converted into a right for WRSW, as the holder of all such interest, to receive a substantially equivalent special limited partner interest in MPLX (the “MPLX Special Limited Partner Interest”). By virtue of the conversion, the ANDX Special Limited Partner Interest was cancelled and ceased to exist as of the effective time of the Merger. For information on ~~such common~~ANDX’s preferred units, please see Note 7.

The assets of ANDX consist of a network of owned and operated crude oil, refined product and natural gas pipelines; crude oil and water gathering systems; refining logistics assets; terminals with ~~respect to~~crude oil and refined products storage capacity; rail facilities; marine terminals including storage; bulk petroleum distribution facilities; a trucking fleet; and natural gas processing and fractionation systems and complexes. The assets are located in the ~~third quarter 2017 distributions. The value~~western and inland regions of ~~these waived distributions was $10 million.~~the United States and complement MPLX’s existing business and assets.

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

MPC ~~contributed~~accounted for its October 1, 2018 acquisition of Andeavor (through which it acquired control of ANDX), using the acquisition method of accounting, which required Andeavor assets and liabilities to be recorded by MPC at the acquisition date fair value. The Merger was closed on July 30, 2019, and the results of ~~HST, WHC and MPLXT to newly created and wholly-owned subsidiaries and entered~~ANDX have been incorporated into ~~commercial agreements related to services provided by these new entities to MPC on January~~the results of MPLX as of October 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~~2018, which is 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 ofdate that common ~~units representing the equity consideration~~control 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-thirds of the first quarter 2017 distributions on the common units issued in connection with the Transaction.established. As a result of ~~this waiver, MPC did not receive two-thirds~~MPC’s relationship with both MPLX and ANDX, the Merger has been treated as a common control transaction, which requires the recasting of MPLX’s historical results and the ~~general partner distributions or IDRs that would have otherwise accrued on such common units with respect~~recognition of assets acquired and liabilities assumed using MPC’s historical carrying value. We recognized $14 million in acquisition costs during the first nine months of 2019 related to the ~~first quarter 2017 distributions. The value of these waived distributions was $6 million.~~

~~HST owns~~Merger, which are reflected in general 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~~administrative expenses. For the three and nine months ended September 30, ~~2016, retrospectively adjusted for the acquisition of HST, WHC~~2019, we recognized $612 million 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$1,789 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~~revenues 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,other income, respectively, 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 distributions or IDRs that would have otherwise accrued on such common units with respect to the first quarter 2016 distributions. The value of these waived distributions was $15 million.

The inland marine business, comprised of 18 tow boats and 219 owned 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, accounted for nearly 60 percent of the total volumes MPC shipped by inland marine vessels as of March 31, 2016. The Partnership accounts for HSM within its L&S segment.

~~4. Investments and Noncontrolling Interests~~

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

Nine Months Ended September 30, 2017
(In millions) MarkWest Utica EMG Other VIEs Non-VIEs Total
Revenues and other income $ 137
$ 49
$ 178
$ 364
Costs and expenses 72
29
115
216
Income from operations 65
20
63
148
Net income 65
19
28
112
Income from equity method investments⁽¹⁾
6
7
16
29

Nine Months Ended September 30, 2016
(In millions) MarkWest Utica EMG
Other VIEs⁽²⁾
Non-VIEs Total
Revenues and other income $ 165
$ 13
$ 108
$ 286
Costs and expenses 70
107
80
257
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 )


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


~~(2)~~	Includes an impairment charge of $89 million for the nine months ended September 30, 2016 related to the Partnership’s investment in Ohio Condensate Company, L.L.C., which does not appear separately in this table.

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

September 30, 2017
(In millions)
MarkWest Utica EMG⁽¹⁾
Other VIEs Non-VIEs Total
Current assets $ 72
$ 47
$ 379
$ 498
Noncurrent assets 2,092
878
4,614
7,584
Current liabilities 37
55
492
584
Noncurrent liabilities 2
12
562
576

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.

As of September 30, 2017 and December 31, 2016, the carrying value of the Partnership’s equity method investments exceeded the underlying net assets of its investees by $1.1 billion. 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 of excess related to goodwill.

~~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 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 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 forANDX. For the three and nine months ended September 30, ~~2016, respectively.~~2019 we recognized $191 million and $539 million, respectively, of net income related to ANDX.

~~Under~~

Table of Contents

4. Investments and Noncontrolling Interests

The following table presents MPLX’s equity method investments at the ~~Amended LLC Agreement, after December 31, 2016, cash generated by MarkWest Utica EMG~~dates indicated:



	Ownership as of	Carrying value at
	September 30,	September 30,		December 31,
(In millions, except ownership percentages)	2020	2020		2019
L&S
MarEn Bakken Company LLC⁽¹⁾	25%	$	469	$	481
Illinois Extension Pipeline Company, L.L.C.	35%	261		265
LOOP LLC	41%	249		238
Andeavor Logistics Rio Pipeline LLC⁽²⁾	67%	195		202
Minnesota Pipe Line Company, LLC	17%	189		190
Whistler Pipeline LLC⁽²⁾	38%	184		134
Explorer Pipeline Company	25%	78		83
W2W Holdings LLC⁽²⁾⁽³⁾	50%	77		0
Wink to Webster Pipeline LLC⁽²⁾⁽³⁾	15%	0		126
Other⁽²⁾		100		55
Total L&S		1,802		1,774
G&P
MarkWest Utica EMG, L.L.C.⁽²⁾	57%	720		1,984
Sherwood Midstream LLC⁽²⁾	50%	560		537
MarkWest EMG Jefferson Dry Gas Gathering Company, L.L.C.⁽²⁾	67%	307		302
Rendezvous Gas Services, L.L.C.⁽²⁾	78%	164		170
Sherwood Midstream Holdings LLC⁽²⁾	51%	151		157
Centrahoma Processing LLC	40%	147		153
Other⁽²⁾		230		198
Total G&P		2,279		3,501
Total		$	4,081	$	5,275


(1)	The investment in MarEn Bakken Company LLC includes our 9.19 percent indirect interest in a joint venture (“Dakota Access”) that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system or DAPL.


(2)	Investments deemed to be VIEs. Some investments included within “Other” have also been deemed to be VIEs.


(3)	During the nine months ended September 30, 2020, we contributed our ownership in Wink to Webster Pipeline LLC to W2W Holdings LLC.

For those entities 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~~have been deemed to be ~~a VIE. Utica Operating is not~~VIEs, neither MPLX nor any of its subsidiaries have been deemed to be the primary beneficiary due to ~~EMG Utica’s~~ voting rights on significant matters. ~~The Partnership’s investment~~While we have the ability to exercise influence through participation in ~~MarkWest Utica EMG’s,~~the management committees 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 maximum exposure to loss~~make all significant decisions, we have equal influence over each committee as a ~~result of its involvement with MarkWest Utica EMG includes its equity investment, any additional capital contribution commitments~~joint interest partner and ~~any operating expenses incurred by~~all significant decisions require the ~~subsidiary operator in excess of its compensation received for the performance~~consent of the ~~operating services. The Partnership did~~other investors without regard to economic interest and as such we have determined that these entities should not ~~provide any financial support to MarkWest Utica EMG that it was not contractually obligated to provide during~~be consolidated and apply the three and nine months ended September 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.

~~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 30, 2017, the Partnership 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 reports its portion~~ of ~~Ohio Gathering’s net assets as a component of its investment~~accounting with respect to our investments 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.each entity.

~~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”), to support Antero Resources Corporation’s development in the Marcellus Shale. MarkWest Liberty Midstream has a 50 percent ownership interest in Sherwood Midstream. Pursuant to the terms of the related limited liability company agreement (the “LLC Agreement”), MarkWest Liberty Midstream contributed assets then under construction with a fair value of approximately $134 million and cash of approximately $20 million. Antero Midstream made an initial capital contribution of approximately $154 million.

Also effective January 1, 2017, MarkWest Liberty Midstream converted all of its ownership interests in MarkWest Ohio Fractionation Company, L.L.C. (“Ohio Fractionation”), a previously wholly-owned subsidiary, to Class A Interests and amended its LLC Agreement to create Class B-3 Interests, which were sold to Sherwood Midstream for $126 million in cash. The Class B-3 Interests provide Sherwood Midstream with 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 is a VIE, as an equity method investment as Sherwood Midstream does not control Ohio Fractionation. MarkWest Liberty Midstream 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 income attributable to noncontrolling interests~~ ~~in 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~~ on the Consolidated Balance Sheets. The Partnership’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 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.~~

~~Sherwood Midstream Holdings~~

Effective January 1, 2017, MarkWest Liberty Midstream and Sherwood Midstream formed a joint venture, 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 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 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 did not provide any financial support to Sherwood Midstream Holdings that it was not contractually obligated to provide during the nine months ended September 30, 2017.

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 30, ~~2017, the Partnership~~2020, MPLX has a ~~14.7~~24.51 percent indirect ownership interest in Sherwood Midstream Holdings through Sherwood Midstream.

MPLX’s maximum exposure to loss as a result of its involvement with equity method investments 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. MPLX did not provide any financial support to equity method investments that it was not contractually obligated to provide during the nine months ended September 30, 2020.

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During the first quarter of 2020, we recorded an other than temporary impairment for three joint ventures in which we have an interest as discussed in Note 1. Impairment of these investments was $1,264 million, of which $1,251 million was related to MarkWest Utica EMG and its investment in Ohio Gathering Company, L.L.C. The fair value of the investments was determined based upon applying the discounted cash flow method, which is an income approach. The discounted cash flow fair value estimate is based on known or knowable information at the interim measurement date. The significant assumptions that were used to develop the estimate of the fair value under the discounted cash flow method include management’s best estimates of the expected future cash flows, including prices and volumes, the weighted average cost of capital and the long-term growth rate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As such, the fair value of these equity method investments represents a Level 3 measurement. As a result, there can be no assurance that the estimates and assumptions made for purposes of the impairment test will prove to be an accurate prediction of the future. The impairment was recorded through “Income from equity method investments.” The impairments were largely due to a reduction in forecasted volumes gathered and processed by the systems operated by the joint ventures. There were no additional impairments recorded during the second or third quarters of 2020.

Summarized financial information for MPLX’s equity method investments for the nine months ended September 30, 2020 and 2019 is as follows:



	Nine Months Ended September 30, 2020
(In millions)	VIEs			Non-VIEs		Total
Revenues and other income	$	132		$	933	$	1,065
Costs and expenses	308			405		713
Income from operations	(176		)	528		352
Net income	(230		)	477		247
(Loss)/income from equity method investments⁽¹⁾	$	(1,138	)	$	126	$	(1,012	)


(1)	Includes the impact of any basis differential amortization or accretion in addition to the impairment of $1,264 million.



	Nine Months Ended September 30, 2019
(In millions)	VIEs		Non-VIEs		Total
Revenues and other income	$	479	$	1,116	$	1,595
Costs and expenses	251		434		685
Income from operations	228		682		910
Net income	192		605		797
Income from equity method investments⁽¹⁾	$	89	$	166	$	255


(1)	Includes the impact of any basis differential amortization or accretion.

Summarized balance sheet information for MPLX’s equity method investments as of September 30, 2020 and December 31, 2019 is as follows:



	September 30, 2020
(In millions)	VIEs		Non-VIEs		Total
Current assets	$	774	$	367	$	1,141
Noncurrent assets	6,398		5,024		11,422
Current liabilities	304		194		498
Noncurrent liabilities	$	1,611	$	857	$	2,468



	December 31, 2019
(In millions)	VIEs		Non-VIEs		Total
Current assets	$	534	$	330	$	864
Noncurrent assets	5,862		5,134		10,996
Current liabilities	192		245		437
Noncurrent liabilities	$	305	$	822	$	1,127

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As of September 30, 2020, the underlying net assets of MPLX’s investees in the G&P segment exceeded the carrying value of its equity method investments by approximately $58 million. At December 31, 2019, the carrying value of MPLX’s equity method investments in the G&P segment exceeded the underlying net assets of its investees by approximately $1.0 billion. As of September 30, 2020 and December 31, 2019, the carrying value of MPLX’s equity method investments in the L&S segment exceeded the underlying net assets of its investees by $331 million and $329 million, respectively. At September 30, 2020 and December 31, 2019, the G&P basis difference was being amortized into net income over the remaining estimated useful lives of the underlying assets, except for $31 million and $498 million of excess related to goodwill, respectively. At September 30, 2020 and December 31, 2019, the L&S basis difference was being amortized into net income over the remaining estimated useful lives of the underlying assets, except for $167 million of excess related to goodwill.

5. Related Party Agreements and Transactions

~~The Partnership’s material~~MPLX engages in transactions with both MPC and certain of its equity method investments as part of its normal business; however, transactions with MPC make up the majority of MPLX’s related party transactions. Transactions with related parties ~~include:~~are further described below.

~~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.~~

~~MarkWest Utica EMG, in which~~ MPLX ~~LP has a 56 percent interest as of September 30, 2017. 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 30, 2017. 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 30, 2017. 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 percent total direct and indirect interest as of September 30, 2017. 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 facilities.

Illinois Extension, in which MPLX LP has a 35 percent interest as of September 30, 2017. Illinois Extension operates 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 midcontinent region of the United States.

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~~ 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~~ and ~~minimum~~other fees for storage ~~volumes~~capacity; operating and management fees; as well as reimbursements for certain direct and indirect costs. MPC has also committed to provide a fixed fee for 100 percent of ~~crude oil, refined products~~available capacity for boats, barges and ~~butane.~~third-party chartered equipment under the marine transportation service agreement. MPLX also has a keep-whole commodity agreement with MPC under which MPC pays us a processing fee for NGLs related to keep-whole agreements and delivers shrink gas to the producers on our behalf. We pay MPC a marketing fee in exchange for assuming the commodity risk. Additionally, MPLX has obligations to MPC for services provided to MPLX by MPC under omnibus and employee services-type agreements as well as other various agreements.

~~In addition,~~MPC has also been advancing certain strategic priorities to lay a foundation for long-term success, including plans to optimize its assets and structurally lower costs in 2021 and beyond, which included an involuntary workforce reduction plan. The workforce reduction plan, together with employee reductions resulting from MPC's indefinite idling of its Martinez, California and Gallup, New Mexico refineries, affected approximately 2,050 employees. All of the ~~Partnership~~employees that conduct MPLX’s business are directly employed by affiliates of MPC, and certain of those employees were affected by MPC’s workforce reductions. During the third quarter of 2020, MPLX reimbursed MPC for $36 million related to severance and employee benefits related expenses that MPC recorded in connection with its workforce reductions. These costs are shown on the Consolidated Statements of Income as “Restructuring expenses.”

Related Party Loan

MPLX is 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 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. In connection with the Merger, on July 31, 2019, MPLX and MPC Investment amended and restated the MPC Loan Agreement to increase the borrowing capacity under the MPC Loan Agreement to $1.5 billion in ~~an amount or amounts that do not result 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.~~July 31, 2024, provided that 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.~~July 31, 2024. Borrowings under the ~~loan will~~MPC Loan Agreement prior to July 31, 2019 bore interest at LIBOR plus 1.50 percent while borrowings as of and after July 31, 2019 bear interest at LIBOR plus ~~1.50 percent. During~~1.25 percent or such lower rate as would be applicable to such loans under the ~~nine months ended September 30, 2017, the Partnership borrowed $829 million and repaid $627 million, resulting in $202 million outstanding balance at September 30, 2017, which is included in~~ ~~Payables-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~~

AsMPLX Credit Agreement as discussed in Note 3,15. Activity on 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~~Loan Agreement was as follows:



(In millions)	Nine Months Ended September 30, 2020			Year Ended December 31, 2019
Borrowings	$	4,870		$	8,540
Average interest rate of borrowings	2.380		%	3.441		%
Repayments	$	5,464		$	7,946
Outstanding balance at end of period⁽¹⁾	$	0		$	594


(1)	Included in “Current liabilities - related parties” on the Consolidated Balance Sheets.

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Prior to the ~~Partnership with the closing of the Transaction.~~

~~HST is a~~Merger, ANDX was also party to a ~~transportation services~~loan agreement with MPC ~~dated January 1, 2015. Under this agreement, HST provides pipeline transportation~~(“ANDX-MPC Loan Agreement”). This facility was entered into on December 21, 2018, with a borrowing capacity of $500 million. In connection with the Merger, on July 31, 2019, MPLX repaid the entire outstanding balance and terminated the ANDX-MPC Loan Agreement. Activity on the ANDX-MPC Loan Agreement prior to the Merger was as follows:



(In millions)	Year Ended December 31, 2019
Borrowings	$	773
Average interest rate of borrowings	4.249		%
Repayments	$	773
Outstanding balance at end of period	$	0

Related Party Revenue

Related party sales to MPC consist of crude oil and refined products ~~as well as related services, for MPC. MPC pays HST for such~~pipeline and trucking transportation services based on ~~contractual rates related to MPC crude oil~~tariff/contracted rates; storage, terminal 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 suchfuels distribution services based on ~~contractual fees relating~~contracted rates; and marine transportation services. Related party sales to MPC ~~product deliveries as well as any viscosity surcharges, loading, handling, transfers or other~~also consist of revenue 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.~~volume deficiency credits.

~~The Partnership is party to various employee services~~MPLX also has operating agreements with MPC under which ~~the Partnership reimburses MPC~~it receives a fee for ~~employee benefit expenses, along with the provision of operational~~operating MPC’s retained pipeline assets and a fixed annual fee for providing oversight and management services ~~including those in support~~required to run the marine business. MPLX also receives management fee revenue for engineering, construction and administrative services for operating certain of ~~HST, WHC and MPLXT.~~its equity method investments.

~~Related Party Transactions~~

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2017		2016		2017		2016		2020		2019		2020		2019
Service revenues
Service revenues - related parties
MPC	$	276	$	253	$	801	$	676	$	908	$	899	$	2,692	$	2,549
Rental income
Other									1		0		2		0
Total Service revenue - related parties									909		899		2,694		2,549
Rental income - related parties
MPC	$	70	$	68	$	207	$	172	241		293		712		904
Product sales⁽¹⁾
Product sales - related parties⁽¹⁾
MPC	$	2	$	2	$	6	$	8	37		32		100		109
Other income - related parties
MPC									48		14		144		34
Other									15		17		46		50
Total Other income - related parties									$	63	$	31	$	190	$	84

(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,~~2020, these sales totaled ~~$63~~$107 million and ~~$173~~$332 million, respectively. For the three and nine months ended September 30, ~~2016,~~2019, these sales totaled ~~$13~~$301 million and ~~$25~~$819 million, respectively.

Related ~~party~~Party Expenses

MPC provides executive management services and certain general and administrative services to MPLX under the terms of our omnibus agreements (“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 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 ~~consist of crude oil~~in its capacity as general contractor to MPLX, and ~~refined products pipeline transportation services based on regulated tariff rates, storage services based on contracted rates~~has certain lease agreements with MPC.

Expenses incurred from MPC under the omnibus and ~~transportation services provided by HSM. Under the Partnership’s pipeline transportation~~employee services agreements ifas well as other purchases from MPC included on the Consolidated Statements of Income are as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2020		2019		2020		2019
Rental cost of sales - related parties
MPC	$	32	$	45	$	119	$	124
Purchases - related parties
MPC	293		297		840		878
Other	4		6		13		16
Total Purchase - related parties	297		303		853		894
General and administrative expenses
MPC	63		59		195		174
Restructuring expenses
MPC	$	36	$	0	$	36	$	0

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 nine months ended September 30, 2020, these charges totaled $29 million and $80 million, respectively. For the three and nine months ended September 30, 2019, these charges totaled $48 million and $127 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 20 for additional information) and deferred revenue on minimum volume commitments. If MPC fails to ~~transport~~meet its minimum ~~throughput~~committed volumes, ~~during any quarter, then~~ MPC will pay ~~the Partnership~~MPLX a deficiency payment ~~equal to~~based on the ~~volume~~terms of the ~~deficiency multiplied by the tariff rate then in effect.~~agreement. The deficiency amounts are recorded as ~~Deferred revenue-related parties~~.“Current liabilities - related parties.” In many cases, 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~~agreements. 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~~agreements or in some cases as ~~follows:~~an equity contribution from its sponsor.

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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)	September 30, 2020		December 31, 2019
Current assets - related parties
Receivables - MPC	$	543	$	621
Receivables - Other	7		22
Prepaid - MPC	11		9
Other - MPC	1		0
Lease Receivables - MPC	29		4
Total	591		656
Noncurrent assets - related parties
Long-term receivables - MPC	32		21
Right of use assets - MPC	231		232
Long-term lease receivables - MPC	390		43
Unguaranteed residual asset - MPC	22		7
Total	675		303
Current liabilities - related parties
Payables - MPC	247		911
Payables - Other	42		37
Operating lease liabilities - MPC	1		1
Deferred revenue - Minimum volume deficiencies - MPC	54		42
Deferred revenue - Project reimbursements - MPC	19		16
Deferred revenue - Project reimbursements - Other	1		1
Total	364		1,008
Long-term liabilities - related parties
Long-term operating lease liabilities - MPC	230		230
Long-term deferred revenue - Project reimbursements - MPC	45		53
Long-term deferred revenue - Project reimbursements - Other	6		7
Total	$	281	$	290

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 and purchases from related parties were immaterial for the nine months ended September 30, 2020 and 2019, 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 the Partnership has more than one class~~

Classes of participating securities it uses the two-class method when calculating the net income (loss) per unit applicable to limited partners. The classes of participating securities include common units, general partner units, Preferred 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 earnings for the ~~entities acquired under common control will be included in the net income (loss) per unit calculation prospectively as described above.~~three and nine months ended September 30, 2020 and 2019 include:



	Nine Months Ended September 30,
	2020	2019
Common Units	ü	ü
Equity-based compensation awards	ü	ü
Series A preferred units	ü	ü
Series B preferred units	ü	ü

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For the three and nine months ended September 30, ~~2017, the Partnership~~2020 and 2019, 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 months ended September 30, ~~2017~~2020 and 2019 were less than ~~one million and for the three and nine months ended September 30, 2016 were less than one million and approximately eight million, respectively.~~1 million.



	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2020			2019			2020			2019
Net income/(loss) attributable to MPLX LP	$	665		$	629		$	(1,411	)	$	1,614
Less: Distributions declared on Series A preferred units⁽¹⁾	20			20			61			61
Distributions declared on Series B preferred units⁽¹⁾	10			10			31			31
Limited partners’ distributions declared on MPLX common units (including common units of general partner)⁽¹⁾⁽²⁾	715			704			2,158			1,919
Undistributed net loss attributable to MPLX LP	$	(80	)	$	(105	)	$	(3,661	)	$	(397	)

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 )


(1)	See Note 7 for distribution information.


(2)	The three and nine months ended September 30, 2019 amounts are net of $12.5 million and $25 million, respectively, of waived distributions with respect to units held by MPC and its affiliates.



	Three Months Ended September 30, 2020
(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	$	715		$	20	$	10	$	745
Undistributed net loss attributable to MPLX LP	(80		)	0		0		(80		)
Net income attributable to MPLX LP⁽¹⁾	$	635		$	20	$	10	$	665
Weighted average units outstanding:
Basic	1,046
Diluted	1,047
Net income attributable to MPLX LP per limited partner unit:
Basic	$	0.61
Diluted	$	0.61

Three 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) $ 88
$ 232
$ 16
$ 336
Undistributed net loss attributable to MPLX LP (2 ) (118 ) —
(120 )
Net income attributable to MPLX LP⁽¹⁾
$ 86
$ 114
$ 16
$ 216
Weighted average units outstanding:
Basic 8
394
31
433
Diluted 8
395
31
434
Net income attributable to MPLX LP per limited partner unit:
Basic $ 0.29

Diluted $ 0.29

Three 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 income attributable to MPLX LP per unit:
Net income attributable to MPLX LP:
Distributions declared (including IDRs) $ 54
$ 179
$ 16
$ 249
Undistributed net loss attributable to MPLX LP (3 ) (105 ) —
(108 )
Net income attributable to MPLX LP⁽¹⁾
$ 51
$ 74
$ 16
$ 141
Weighted average units outstanding:
Basic 7
341
31
379
Diluted 7
346
31
384
Net income attributable to MPLX LP per limited partner unit:
Basic $ 0.22

Diluted $ 0.21

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.~~priorities applicable to the period.

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	Three Months Ended September 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	$	704		$	20	$	10	$	734
Undistributed net loss attributable to MPLX LP	(105		)	0		0		(105		)
Net income attributable to MPLX LP⁽¹⁾	$	599		$	20	$	10	$	629
Weighted average units outstanding:
Basic⁽²⁾	974
Diluted⁽²⁾	975
Net income attributable to MPLX LP per limited partner unit:
Basic	$	0.61
Diluted	$	0.61


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


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



	Nine Months Ended September 30, 2020
(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	$	2,158		$	61	$	31	$	2,250
Undistributed net loss attributable to MPLX LP	(3,661		)	0		0		(3,661		)
Net (loss)/income attributable to MPLX LP⁽¹⁾	$	(1,503	)	$	61	$	31	$	(1,411	)
Weighted average units outstanding:
Basic	1,054
Diluted	1,054
Net income attributable to MPLX LP per limited partner unit:
Basic	$	(1.43	)
Diluted	$	(1.43	)


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

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	Nine Months Ended September 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	$	1,919		$	61	$	31	$	2,011
Undistributed net loss attributable to MPLX LP	(397		)	0		0		(397		)
Net income attributable to MPLX LP⁽¹⁾	$	1,522		$	61	$	31	$	1,614
Weighted average units outstanding:
Basic⁽²⁾	855
Diluted⁽²⁾	855
Net income attributable to MPLX LP per limited partner unit:
Basic	$	1.78
Diluted	$	1.78


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


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

7. Equity

The changes in the number of common units outstanding during the nine months ended September 30, ~~2017~~2020 are summarized below:



(In units)	Common
Balance at December 31, 2019	1,058,355,471
Unit-based compensation awards	395,091
Units redeemed in Wholesale Exchange	(18,582,088	)
Balance at September 30, 2020	1,040,168,474

Wholesale Exchange and Merger

In connection with the Wholesale Exchange as discussed in Note 3, 18,582,088 units were redeemed by MPC in exchange for all of the outstanding membership interests in WRW. These units were cancelled by MPLX immediately following the transaction.

In connection with the Merger and as discussed in Note 3, each common unit held by ANDX’s public unitholders was converted into the right to receive 1.135 MPLX common units while ANDX common units held by certain affiliates of MPC were converted into the right to receive 1.0328 MPLX common units. This resulted in the issuance of MPLX common units of approximately 102 million units to public unitholders and approximately 161 million units to MPC on July 30, 2019.

Series B Preferred Units

Prior to the Merger, ANDX had outstanding 600,000 units of 6.875 percent Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units representing limited partner interests of ANDX at a price to the public of $1,000 per unit. Upon completion of the Merger, the ANDX preferred units converted to preferred units of MPLX representing substantially equivalent limited partnership interests in MPLX (the “Series B preferred units”). The Series B preferred units are pari passu with the Series A preferred units with respect to distribution rights and rights upon liquidation. Distributions on the Series B preferred units are payable semi-annually in arrears on the 15th day, or the first business day thereafter, of February and August of each year up to and including February 15, 2023. After February 15, 2023, the holders of Series B preferred units are entitled to receive cumulative, quarterly distributions payable in arrears on the 15th day of February, May, August and November of each year, or the first business day thereafter, based on a floating annual rate equal to the three-month LIBOR plus 4.652 percent.

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The changes in the Series B preferred unit balance from December 31, 2019 through September 30, 2020 are summarized below. Series B preferred units are included in the Consolidated Balance Sheets and Consolidated Statements of Equity within “Equity of Predecessor” for the period prior to the Merger and within “Series B preferred units” for the period following the Merger.



(In millions)	Series B Preferred Units
Balance at December 31, 2019	$	611
Net income allocated	31
Distributions received by Series B preferred unitholders	(41		)
Balance at September 30, 2020	$	601

TexNew Mex Units - Prior to the Merger, MPC held 80,000 ANDX TexNew Mex units, representing all outstanding units. At the time of the Merger, each ANDX TexNew Mex unit was automatically converted into TexNew Mex units of MPLX with substantially the same rights and obligations as the ANDX TexNew Mex units. The TexNew Mex units represent the right to receive quarterly distribution payments in an amount calculated using the distributable cash flow generated by a particular portion of the TexNew Mex pipeline system, in excess of a base amount and adjusted for previously agreed upon stipulations and contingencies. Distributions earned by TexNew Mex units during the fourth quarter of 2019 and during the six months ended June 30, 2020 were immaterial. Distributions of $5 million were earned by TexNew Mex units during the three months ended September 30, 2020.

Cash distributions–In accordance with the MPLX partnership agreement, on October 27, 2020, MPLX declared a quarterly cash distribution for the third quarter of 2020, totaling $715 million, or $0.6875 per common unit. This rate will also be received by Series A preferred unitholders. These distributions will be paid on November 13, 2020 to common unitholders of record on November 6, 2020. 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, or the first business day thereafter, up to and including February 15, 2023. After February 15, 2023, the holders of Series B preferred units are entitled to receive cumulative, quarterly distributions payable in arrears on the 15th day of February, May, August and November of each year, or the first business day thereafter, based on a floating annual rate equal to the three-month LIBOR plus 4.652 percent, in each case assuming a distribution is declared by the Board of Directors. Accordingly, MPLX made a cash distribution payment totaling $21 million to Series B unitholders on August 17, 2020.

Quarterly distributions for 2020 and 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



(Per common unit)	2020		2019
March 31,	$	0.6875	$	0.6575
June 30,	0.6875		0.6675
September 30,	$	0.6875	$	0.6775


~~(1)~~	As a result of the 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.


~~(2)~~	~~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.~~


~~(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, on October 25, 2017, the Partnership declared a quarterly cash distribution, based on the results of the third quarter of 2017, totaling $320 million, or $0.5875 per common unit. These distributions will be paid on November 14, 2017 to common unitholders of record on November 6, 2017.

The allocation of total quarterly cash distributions to ~~general,~~ limited and ~~Preferred~~preferred unitholders is as follows for the three and nine months ended September 30, ~~2017~~2020 and ~~2016. The Partnership’s~~2019. 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.

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 September 30,				Nine Months Ended September 30,
(In millions)	2020		2019		2020		2019
Common and preferred unit distributions:
Common unitholders, includes common units of general partner	$	715	$	704	$	2,158	$	1,919
Series A preferred unit distributions	20		20		61		61
Series B preferred unit distributions	10		10		31		31
Total cash distributions declared	$	745	$	734	$	2,250	$	2,011

The distribution on common units for the three and nine months ended September 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 the Merger. Due to the timing of the closing, distributions presented in the table above include second quarter

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distributions for MPLX common units and Series B preferred units issued to former ANDX unitholders in connection with the Merger. The distributions on common units exclude $12.5 million of waived distributions for the three months ended September 30, 2019 and $25 million of waived distributions for the nine months ended September 30, 2019.

8. ~~Redeemable~~Series A Preferred Units

~~Private Placement of Preferred Units~~ –On May 13, 2016, MPLX LP ~~completed the private placement of~~issued 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 units were used for capital expenditures, repayment of debt and general partnership 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, ~~cumulative~~when and if declared by the board, a quarterly ~~distributions~~distribution equal to ~~$0.528125 per unit. Following the second anniversary of the issuance of the Preferred units, the holders of the Preferred units will receive as a distribution~~ the greater of $0.528125 per unit or the amount of distributions they would have received on an as converted basis. On October 27, 2020, MPLX declared a quarterly cash distribution of $0.6875 per common unit ~~distributions paid to holders~~for the third quarter of ~~MPLX LP~~2020. Holders of the Series A preferred units will receive the common ~~units.~~unit rate in lieu of the lower $0.528125 base amount.

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

(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.

Approximately 29.6 million Series A preferred units remaining outstanding as of September 30, 2020. The changes in the redeemable preferred balance from December 31, 2019 through September 30, 2020 are summarized below:



(In millions)	Redeemable Series A Preferred Units
Balance at December 31, 2019	$	968
Net income allocated	61
Distributions received by Series A preferred unitholders	(61		)
Balance at September 30, 2020	$	968

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~~2 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~~asphalt, refined petroleum ~~products. Segment information for prior periods~~products and water. Also includes ~~retrospective adjustments in connection with the acquisition of HST, WHC~~an inland marine business, terminals, rail facilities, storage caverns 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.~~refining logistics.

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

Our CEO evaluates the performance of our segments using Segment Adjusted EBITDA. Amounts included in net income and excluded from Segment Adjusted EBITDA include: (i) depreciation and amortization; (ii) provision/(benefit) for income taxes; (iii) amortization of deferred financing costs; (iv) extinguishment of debt; (v) non-cash equity-based compensation; (vi)

~~The Partnership has investments in entities that are accounted for using the~~

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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.

The tables below present information about revenues and other income, ~~from operations and~~ capital expenditures and investments in unconsolidated affiliates as well as total assets for ~~the reported~~our reportable 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,				Nine Months Ended September 30,
(In millions)	2020		2019		2020			2019
L&S
Service revenue	$	989	$	976	$	2,924		$	2,787
Rental income	249		304		737			935
Product related revenue	9		22		49			57
Income from equity method investments	36		60		126			159
Other income	51		17		154			45
Total segment revenues and other income⁽¹⁾	1,334		1,379		3,990			3,983
Segment Adjusted EBITDA⁽²⁾	893		766		2,604			1,895
Restructuring expenses	27		0		27			0
Capital expenditures	118		272		410			700
Investments in unconsolidated affiliates	4		95		132			163
G&P
Service revenue	524		555		1,549			1,627
Rental income	94		88		271			260
Product related revenue	234		207		607			714
Income/(loss) from equity method investments	47		35		(1,138		)	96
Other income	14		16		41			45
Total segment revenues and other income⁽¹⁾	913		901		1,330			2,742
Segment Adjusted EBITDA⁽²⁾	442		399		1,252			1,120
Restructuring expenses	9		0		9			0
Capital expenditures	131		321		375			953
Investments in unconsolidated affiliates	$	18	$	76	$	112		$	331

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~~Within the total segment revenues and other income amounts presented above, third party revenues for the L&S segment were $139 million and $443 million for the three and nine months ended September 30, 2020, respectively, and $182 million and $498 million for the three and nine months ended September 30, 2019, respectively. Third party revenues for the G&P segment were $858 million and $1,181 million for the three and nine months ended September 30, 2020, respectively, and $843 million and $2,581 million for the three and nine months ended September 30, 2019, respectively.


(2)	See below for the reconciliation from Segment Adjusted EBITDA to net income.



(In millions)	September 30, 2020		December 31, 2019
Segment assets
Cash and cash equivalents	$	28	$	15
L&S	21,144		20,810
G&P	15,490		19,605
Total assets	$	36,662	$	40,430

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The table below provides a reconciliation between net (loss)/income and Segment Adjusted EBITDA.



	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2020			2019			2020			2019
Reconciliation to Net income/(loss):
L&S Segment Adjusted EBITDA	$	893		$	766		$	2,604		$	1,895
G&P Segment Adjusted EBITDA	442			399			1,252			1,120
Total reportable segments	1,335			1,165			3,856			3,015
Depreciation and amortization⁽¹⁾	(346		)	(302		)	(992		)	(916		)
Provision for income taxes	(1		)	(4		)	(1		)	(2		)
Amortization of deferred financing costs	(15		)	(10		)	(44		)	(29		)
Non-cash equity-based compensation	(4		)	(5		)	(12		)	(17		)
Impairment expense	0			0			(2,165		)	0
Net interest and other financial costs	(223		)	(223		)	(647		)	(657		)
Gain on extinguishment of debt	14			0			14			0
Income/(loss) from equity method investments	83			95			(1,012		)	255
Distributions/adjustments related to equity method investments	(130		)	(145		)	(369		)	(399		)
Unrealized derivative (losses)/gains⁽²⁾	(10		)	11			(1		)	7
Acquisition costs	0			(9		)	0			(14		)
Restructuring expenses	(36		)	0			(36		)	0
Other	(3		)	(1		)	(5		)	(1		)
Adjusted EBITDA attributable to noncontrolling interests	10			9			27			23
Adjusted EBITDA attributable to Predecessor⁽³⁾	0			108			0			770
Net income/(loss)	$	674		$	689		$	(1,387	)	$	2,035

(1)

Depreciation and amortization attributable to L&S was $164 million and $440 million for the three and nine months ended September 30, 2020, respectively, and $113 million and $373 million for the three and nine months ended September 30, 2019, respectively. Depreciation and amortization attributable to G&P was $182 million and $552 million for the three and nine months ended September 30, 2020, respectively, and $189 million and $543 million for the three and nine months ended September 30, 2019, respectively.

(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.


(3)	The adjusted EBITDA adjustments related to Predecessor are excluded from adjusted EBITDA attributable to MPLX LP prior to the Merger.

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 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, 2020		December 31, 2019
NGLs	$	3	$	5
Line fill	11		10
Spare parts, materials and supplies	103		95
Total inventories	$	117	$	110

(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 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



(In millions)	Estimated Useful Lives	September 30, 2020		December 31, 2019
L&S
Pipelines	2-51 years	$	6,001	$	5,572
Refining Logistics	13-40 years	2,196		2,870
Terminals	4-40 years	1,534		1,109
Marine	15-20 years	961		906
Land, building and other	1-61 years	1,576		1,817
Construction-in progress		403		660
Total L&S property, plant and equipment		12,671		12,934
G&P
Gathering and transportation	5-40 years	7,413		7,159
Processing and fractionation	10-40 years	5,944		5,545
Land, building and other	3-40 years	509		484
Construction-in-progress		382		745
Total G&P property, plant and equipment		14,248		13,933
Total property, plant and equipment		26,919		26,867
Less accumulated depreciation⁽¹⁾		5,304		4,722
Property, plant and equipment, net		$	21,615	$	22,145


(1)	~~Certain prior period amounts have been updated to conform to current period presentation.~~The September 30, 2020 balance includes property, plant and equipment impairment charges recorded during the first quarter of 2020 as discussed below.

Long-lived assets used in operations are assessed for impairment whenever changes in facts and circumstances indicate that the carrying value of the assets may not be recoverable based on the expected undiscounted future cash flow of an asset group. For purposes of impairment evaluation, long-lived assets must be grouped at the lowest level for which independent cash flows can be identified, which is at least at the segment level and in some cases for similar assets in the same geographic region where cash flows can be separately identified. If the sum of the undiscounted cash flows is less than the carrying value of an asset group, fair value is calculated, and the carrying value is written down if greater than the calculated fair value.

No impairment triggers were identified in the second or third quarters of 2020; however, during the first quarter of 2020, we did identify an impairment trigger relating to asset groups within our Western G&P reporting unit as a result of significant impacts to forecasted cash flows for these asset groups resulting from the first quarter events and circumstances as discussed in Note 1. The cash flows associated with these assets were significantly impacted by volume declines reflecting decreased forecasted producer customer production as a result of lower commodity prices. After assessing each asset group within the Western G&P reporting unit for impairment, only the East Texas G&P asset group had a carrying value in excess of the fair value of its underlying assets. As a result, an impairment of $174 million was recorded to “Impairment expense” on the Consolidated Statements of Income in the first quarter of 2020. Fair value of the assets was determined using a combination of an income and cost approach. The income approach utilized significant assumptions including management’s best estimates of the expected future cash flows, the estimated useful life of the asset group and discount rate. The cost approach utilized assumptions for the current replacement costs of similar assets adjusted for estimated depreciation and deterioration of the existing equipment and economic obsolescence. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of our impairment analysis will prove to be an accurate prediction of the future. The fair value measurements for the asset group fair values represent Level 3 measurements.

12. Goodwill and Intangibles

Goodwill

MPLX annually evaluates goodwill for impairment as of November 30, as well as whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit with goodwill is less than its carrying amount.

There were no events or changes in circumstances noted in the second or third quarters of 2020 which would indicate it is more likely than not that the fair value of our reporting units with goodwill is less than their carrying amount. During the first quarter of 2020, we determined that an interim impairment analysis of the goodwill recorded was necessary based on consideration of a number of first quarter events and circumstances as discussed in Note 1. Our producer customers in our Eastern G&P region reduced production forecasts and drilling activity in response to the global economic downturn. Additionally, a decline in NGL prices impacted our future revenue forecast. After performing our evaluations related to the interim impairment of goodwill during the first quarter of 2020, we recorded an impairment of $1,814 million within the Eastern G&P reporting unit, which was recorded to “Impairment expense” on the Consolidated Statements of Income. The impairment was primarily driven by additional guidance related to the slowing of drilling activity, which has reduced production growth forecasts from our producer customers. This resulted in goodwill totaling approximately $7.7 billion as of March 31, 2020 within 4 reporting units. The fair value of the remaining reporting units with goodwill were in excess of their carrying value by percentages ranging from 8.5 percent to 270.0 percent. The reporting unit whose fair value exceeded its carrying amount by 8.5 percent, our Crude Gathering reporting unit, had goodwill totaling $1.1 billion at March 31, 2020. The operations which make up this reporting unit were acquired through the merger with ANDX. MPC accounted for its October 1, 2018 acquisition of Andeavor (through which it acquired control of ANDX), using the acquisition method of accounting, which required Andeavor assets and liabilities to be recorded by MPC at the acquisition date fair value. The Merger was closed on July 30, 2019 and has been treated as a common control transaction, which required the recognition of assets acquired and liabilities assumed using MPC’s historical carrying value. As such, given the short amount of time from when fair value was established to the date of the impairment test, the amount by which the fair value exceeded the carrying value within this reporting unit was not unexpected.

Our reporting units are one level below our operating segments and are determined based on the way in which segment management operates and reviews each operating segment. The fair value of our 6 reporting units was determined based on applying both a discounted cash flow or income approach as well as a market approach. The discounted cash flow fair value estimate is based on known or knowable information at the measurement date. The significant assumptions that were used to develop the estimates of the fair values under the discounted cash flow method included management’s best estimates of the expected future results and discount rate, which ranged from 9.5 percent to 11.5 percent. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the interim goodwill impairment test will prove to be an accurate prediction of the future. The fair value measurements for the individual reporting units represent Level 3 measurements.

After performing our evaluations related to the impairment of goodwill during the fiscal year ending December 31, 2019, we recorded an impairment of $1,197 million within the Western G&P reporting unit. The remainder of the reporting units’ fair values were in excess of their carrying values. The impairment was primarily driven by updated guidance related to the slowing of drilling activity, which has reduced production growth forecasts from our producer customers. This resulted in goodwill totaling approximately $9.5 billion as of December 31, 2019, with all but 1 of our 6 reporting units having goodwill.

The changes in carrying amount of goodwill were as follows:



(In millions)	L&S			G&P			Total
Gross goodwill as of December 31, 2018	$	7,234		$	2,912		$	10,146
Accumulated impairment losses	0			(130		)	(130		)
Balance as of December 31, 2018	7,234			2,782			10,016
Impairment losses	0			(1,197		)	(1,197		)
Acquisitions	488			229			717
Balance as of December 31, 2019	7,722			1,814			9,536
Impairment losses	0			(1,814		)	(1,814		)
Wholesale Exchange (Note 3)	(65		)	0			(65		)
Balance as of September 30, 2020	7,657			0			7,657

Gross goodwill as of September 30, 2020	7,657			3,141			10,798
Accumulated impairment losses	0			(3,141		)	(3,141		)
Balance as of September 30, 2020	$	7,657		$	0		$	7,657

Intangible Assets

During the first quarter of 2020, we also determined that an impairment analysis of intangibles within our Western G&P reporting unit was necessary. See Note 11 for additional information regarding our assessment around the Western G&P reporting unit, and more specifically our East Texas G&P asset group. The fair value of the intangibles in our East Texas G&P asset group was determined based on applying the multi-period excess earnings method, which is an income approach. Key assumptions included management’s best estimates of the expected future cash flows from existing customers, customer attrition rates and the discount rate. After performing our evaluations related to the impairment of intangible assets associated with our East Texas G&P asset group during the first quarter of 2020, we recorded an impairment of $177 million to “Impairment expense” on the Consolidated Statements of Income related to our customer relationships.

MPLX’s remaining intangible assets are comprised of customer contracts and relationships. Gross intangible assets with accumulated amortization as of September 30, 2020 and December 31, 2019 is shown below:



		September 30, 2020							December 31, 2019
(In millions)	Useful Lives	Gross		Accumulated Amortization⁽¹⁾⁽²⁾			Net		Gross		Accumulated Amortization			Net
L&S	6 - 8 years	$	283	$	(72	)	$	211	$	283	$	(45	)	$	238
G&P	6 - 25 years	1,288		(508		)	780		1,288		(256		)	1,032
		$	1,571	$	(580	)	$	991	$	1,571	$	(301	)	$	1,270


(1)	Amortization expense attributable to the G&P and L&S segments for the nine months ended September 30, 2020 was $75 million and $27 million, respectively.


(2)	Impairment charge of $177 million is included within the G&P accumulated amortization.

~~12.~~Estimated future amortization expense related to the intangible assets at September 30, 2020 is as follows:



(In millions)
2020	$	32
2021	128
2022	128
2023	128
2024	124
Thereafter	451
Total	$	991

13. Fair Value Measurements

Fair Values – Recurring

Fair value measurements and disclosures relate primarily to ~~the Partnership’s~~MPLX’s derivative positions as discussed in Note ~~13. Money market funds, which are included in~~ ~~Cash and cash equivalents~~ on14. The following table presents the ~~Consolidated Balance Sheets, are measured~~financial instruments carried at fair value on a recurring basis as of September 30, 2020 and ~~are included in Level 1 measurements of~~December 31, 2019 by fair value hierarchy level. MPLX has elected to offset the ~~valuation hierarchy. Level 2 instruments include crude oil and natural gas swap contracts.~~ fair value amounts recognized for multiple derivative contracts executed with the same counterparty.



	September 30, 2020					December 31, 2019
(In millions)	Assets		Liabilities			Assets		Liabilities
Significant unobservable inputs (Level 3)
Embedded derivatives in commodity contracts	$	0	$	(61	)	$	0	$	(60	)
Total carrying value on Consolidated Balance Sheets	$	0	$	(61	)	$	0	$	(60	)

Level 3 instruments include all NGL transactions and embedded derivatives in commodity contracts. The ~~following table presents the financial instruments carried at~~embedded derivative liability relates to a natural gas purchase commitment embedded in a keep-whole processing agreement. The 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~~calculation for these Level 3 instruments used significant unobservable inputs ~~used in the valuation~~including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from $0.46 to $0.97 per gallon with a weighted average of ~~Level 3 instruments as of September 30, 2017. The market approach is used for valuation of all instruments.~~$0.58 per gallon and



~~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

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~~business strategy,~~(2) 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 of 100 percent 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~~the gas purchase commitment and ~~liabilities) –~~ ~~For the Partnership’s commodity contracts, increases in forward NGL prices result in a decrease~~related keep-whole processing agreement, respectively. Increases or decreases 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 fracfractionation 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~~or 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~~liability, respectively. Beyond the ~~valuation of the Partnership’s commodity~~embedded derivative ~~contracts and embedded derivatives in~~discussed above, we had no outstanding commodity contracts ~~except for the Natural Gas Embedded Derivative. The Risk Department reports to the Chief Financial Officer and is responsible for the oversight~~as 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/September 30, 2020 or ~~data provided by at least one other independent third-party pricing service.~~December 31, 2019.

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~~following table is a ~~rollforward~~reconciliation of the ~~balance sheet amounts~~net beginning and ending balances recorded for ~~the three and nine months ended September 30, 2017 and 2016, respectively (including the change in fair value), for~~net assets and liabilities classified ~~by the Partnership within~~as Level 3 ofin the ~~valuation~~fair value hierarchy.



	Three Months Ended September 30, 2020					Three Months Ended September 30, 2019
(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	$	0	$	(51	)	$	0	$	(65	)
Total (losses)/gains (realized and unrealized) included in earnings⁽¹⁾	0		(12		)	0		9
Settlements	0		2			0		2
Fair value at end of period	0		(61		)	0		(54		)
The amount of total (losses)/gains for the period included in earnings attributable to the change in unrealized gains/(losses) relating to liabilities still held at end of period	$	0	$	(11	)	$	0	$	9

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 )


	Three Months Ended September 30, 2016						Nine Months Ended September 30, 2016						Nine Months Ended September 30, 2020					Nine Months Ended September 30, 2019
(In millions)	Commodity Derivative Contracts (net)			Embedded Derivatives in Commodity Contracts (net)			Commodity Derivative Contracts (net)			Embedded Derivatives in Commodity Contracts (net)			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	)	$	0	$	(60	)	$	0	$	(61	)
Total gains (losses) (realized and unrealized) included in earnings⁽¹⁾	2			(6		)	(5		)	(17		)
Total (losses)/gains (realized and unrealized) included in earnings⁽¹⁾													0		(5		)	0		2
Settlements	(1		)	2			(6		)	5			0		4			0		5
Netting adjustment⁽²⁾	—			—			1			—
Fair value at end of period	$	(3	)	$	(44	)	$	(3	)	$	(44	)	0		(61		)	0		(54		)
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	)
The amount of total (losses)/gains for the period included in earnings attributable to the change in unrealized gains/(losses) relating to liabilities still held at end of period													$	0	$	(2	)	$	0	$	5

(1)

Gains and losses on ~~Commodity Derivative Contracts~~commodity derivative contracts classified as Level 3 are recorded in ~~Product sales~~ in“Product sales”on the ~~accompanying~~ Consolidated Statements of Income. Gains and losses on ~~Embedded Derivatives~~derivatives embedded in ~~Commodity Contracts~~commodity contracts are recorded in ~~Purchased~~“Purchased product ~~costs~~costs” and ~~Cost~~“Cost of ~~revenues~~.revenues” on the Consolidated Statements of Income.

~~(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~~MPLX’s primary financial instruments are cash and cash equivalents, receivables, receivables from related parties, lease receivables from related parties, accounts payable, payables to related parties and long-term debt. ~~The Partnership’s~~MPLX’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~~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 instruments are recorded at fair value, based on available market information (see Note ~~13)~~14).

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The fair value of ~~the Partnership’s~~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 ~~the Partnership’s~~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~~our debt, excluding ~~capital~~finance leases, and SMR liability:



	September 30, 2020				December 31, 2019
(In millions)	Fair Value		Carrying Value		Fair Value		Carrying Value
Long-term debt (including amounts due within one year)	$	21,721	$	20,455	$	21,054	$	19,800
SMR liability	$	87	$	76	$	90	$	80

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.~~14. 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 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.

~~Volume of Commodity Derivative Activity~~

As of September 30, ~~2017, the Partnership~~2020, 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~~unilateral option to extend the agreement 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.~~2 consecutive five-year terms through December 2032. For accounting purposes, ~~these contracts~~the natural gas purchase commitment and the term extending options 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’s option to extend the agreement for two successive five-year terms through December 31, 2032. The purchase of gas at prices based on the frac spread and the option to extend the agreements have been identified as a singlecompound 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 and the probability of the producer customer exercising its option to ~~extend and the estimated favorability of these contracts compared to current market conditions.~~extend. The changes in fair value are recorded in earnings through ~~Purchased~~“Purchased product ~~costs~~ incosts” on the Consolidated Statements of Income. As of September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the estimated fair value of this contract was a liability of ~~$52~~$61 million and ~~$54~~$60 million, respectively.

~~The Partnership~~Certain derivative positions are subject to master netting agreements, therefore, MPLX has ~~a commodity contract~~elected to offset derivative assets and liabilities that ~~gives it an option~~are legally permissible 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.~~be offset. 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~~2020 and December 31, 2019, there were no ~~material changes to~~derivative assets or liabilities that were offset on 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.Consolidated Balance Sheets. The impact of ~~the Partnership’s~~MPLX’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 )



(In millions)	September 30, 2020					December 31, 2019
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	$	0	$	(4	)	$	0	$	(5	)
Other noncurrent assets / Deferred credits and other liabilities	0		(57		)	0		(55		)
Total	$	0	$	(61	)	$	0	$	(60	)


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

~~Certain~~For further information regarding the fair value measurement of derivative instruments, see Note 13. There were no material changes to MPLX’s policy regarding the accounting for Level 2 and Level 3 instruments as previously disclosed in MPLX’s Annual Report on Form 10-K for the year ended December 31, 2019. MPLX does not designate any of its commodity derivative positions are subject to master netting agreements, therefore the Partnership 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 the Consolidated Balance Sheets:as hedges for accounting purposes.

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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 the table above, the Partnership does not offset a counterparty’s current derivative contracts with the counterparty’s non-current derivative contracts, although the Partnership’s master netting arrangements would allow current and non-current positions to be offset in the event of default. Additionally, in the event of default, the Partnership’s master netting arrangements would allow for the offsetting of all transactions executed under the master netting arrangement. These types 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).

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 September 30,						Nine Months Ended September 30,
(In millions)	2020			2019			2020			2019
Purchased product costs
Realized (loss)/gain	$	(2	)	$	(2	)	$	(4	)	$	(5	)
Unrealized (loss)/gain	(10		)	11			(1		)	7
Purchased product costs derivative (loss)/gain	(12		)	9			(5		)	2

Total derivative (loss)/gain	$	(12	)	$	9		$	(5	)	$	2

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.~~15. Debt

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



(In millions)	September 30, 2020			December 31, 2019
MPLX LP:
Bank revolving credit facility	$	95		$	0
Term loan facility	0			1,000
Floating rate senior notes	1,000			2,000
Fixed rate senior notes	19,506			16,887
Consolidated subsidiaries:
MarkWest	23			23
ANDX	121			190
Financing lease obligations⁽¹⁾	12			19
Total	20,757			20,119
Unamortized debt issuance costs	(118		)	(106		)
Unamortized discount/premium	(290		)	(300		)
Amounts due within one year	(307		)	(9		)
Total long-term debt due after one year	$	20,042		$	19,704

(1) See Note 20 for lease information.

(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

OnEffective July ~~21, 2017,~~30, 2019, in connection with the ~~Partnership entered into a syndicated credit agreement to replace~~closing of the Merger, MPLX amended and restated its ~~previously outstanding $2.0 billion five-year bank~~ revolving credit facility ~~with a $2.25~~(as amended, the “MPLX Credit Agreement”) to, among other things, increase borrowing capacity to up to $3.5 billion ~~five-year bank revolving credit facility that expires in~~and extend its term from July 2022 (the “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.to July 2024. During the nine months ended September 30, ~~2017, the Partnership had no borrowings under the previous bank revolving credit facility. During the nine months ended September 30, 2017, the Partnership~~2020, MPLX borrowed~~$420 million~~ $2.995 billion under the MPLX Credit Agreement, ~~2022,~~ at an average interest rate of ~~2.702~~1.510 percent,. and repaid $2.9 billion. At September 30, ~~2017, the Partnership~~2020, MPLX had ~~$420~~$95 million in outstanding borrowings and $3less than $1 million in letters of credit outstanding under the ~~new facility,~~MPLX Credit Agreement, resulting in total availability of ~~$1.827~~$3.405 billion, or ~~81.2~~97.3 percent of the borrowing capacity.

~~The $250 million~~Term Loan Agreement

On September 26, 2019, MPLX entered into a Term Loan Agreement which provides for a committed term loan facility ~~was drawn~~for up to an aggregate of $1 billion. Borrowings under the Term Loan Agreement bear interest, at MPLX’s election, at either (i) the Adjusted LIBO Rate (as defined in ~~full~~the Term Loan Agreement) plus a margin ranging from 75.0 basis points to 100.0 basis points per annum, depending on ~~November 20, 2014.~~MPLX’s credit ratings, or (ii) the Alternate Base Rate (as defined in the Term Loan Agreement). On ~~July 19, 2017,~~August 18, 2020 MPLX ~~LP prepaid~~fully repaid the ~~entire~~$1.0 billion of outstanding ~~principal~~borrowings on the Term Loan Agreement, which resulted in the recognition of ~~this loan facility with cash~~$1 million of unamortized issuance costs, which is included on ~~hand. The borrowings under this facility between January 1, 2017 and July 19, 2017 were at an average interest rate~~the Consolidated Statements of ~~2.407 percent.~~Income as “Other financial costs”.

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Floating Rate Senior Notes

On ~~February 10, 2017, the Partnership completed a public offering of $2.25~~September 9, 2019, MPLX issued $2.0 billion aggregate principal amount of ~~unsecured~~floating rate senior notes in a public offering, consisting of ~~(i) $1.25 billion aggregate principal amount of 4.125 percent senior notes due in March 2027 and (ii)~~ $1.0 billion aggregate principal amount of ~~5.200 percent senior~~ notes due ~~in March 2047~~September 2021 and $1.0 billion aggregate principal amount of notes due September 2022 (collectively, the ~~“New~~“Floating Rate Senior Notes”). The ~~net proceeds from the New~~Floating Rate Senior Notes ~~totaled approximately $2.22~~were offered at a price to the public of 100 percent of par. The Floating Rate Senior Notes are callable, in whole or in part, at par plus accrued and unpaid interest at any time on or after September 10, 2020. Interest on the Floating Rate Senior Notes is payable quarterly in March, June, September and December, commencing on December 9, 2019. The interest rate applicable to the floating rate senior notes due September 2021 is LIBOR plus 0.9 percent per annum. The interest rate applicable to the floating rate senior notes due September 2022 is LIBOR plus 1.1 percent per annum.

On September 14, 2020 MPLX redeemed, at par value, all of the $1.0 billion ~~after deducting underwriting discounts,~~aggregate principal amount of notes due September 2021 which resulted in the recognition of $3 million of unamortized issuance costs, which is included on the Consolidated Statements of Income as “Other financial costs”.

Fixed Rate Senior Notes

MPLX’s senior notes, including those issued by consolidated subsidiaries, consist of various series of senior notes expiring between 2022 and ~~were used for general partnership purposes and capital expenditures.~~2058 with interest rates ranging from 1.750 percent to 6.250 percent. Interest on each series of ~~the~~ notes is payable semi-annually in arrears on various dates depending on the series of the notes.

On August 18, 2020 MPLX issued $3 billion aggregate principal amount of senior notes in a public offering, consisting of $1.5 billion aggregate principal amount of 1.750 percent senior notes due March 2026 and $1.5 billion aggregate principal amount of 2.650 percent senior notes due August 2030 (collectively, the “August 2020 New Senior Notes”). The August 2020 New Senior Notes were offered at a price to the public of 99.785 percent and 99.913 percent of par, respectively. Interest on each series of notes in the August 2020 New Senior Notes is payable semi-annually in arrears, commencing on March 1, 2021 for the senior notes due March 2026 and ~~September 1,~~ commencing on February 15, 2021 for the senior notes due August 2030. The net proceeds were used to repay the $1.0 billion of outstanding borrowings under the MPLX Term Loan Agreement, to repay the $1.0 billion floating rate notes due September ~~1, 2017.~~2021 and to redeem all of the $450 million aggregate principal amount of 6.375 percent senior notes due May 2024, $69 million of which was issued by ANDX. These notes were redeemed at 103.2 percent of the aggregate principal amount, which resulted in a payment of $14 million related to the note premium offset by the immediate recognition of $18 million of unamortized debt premium/discount and issuance costs, both of which are included on the Consolidated Statements of Income as “Other financial costs.” Proceeds were also used to reduce amounts outstanding under the MPLX Credit Agreement at the time and will be used to redeem the $300 million aggregate principal amount of 6.250 percent senior notes due October 15, 2022, including approximately $34 million in aggregate principal amount of senior notes issued by ANDX, in October of 2020. The 6.250 percent senior notes are included on the Consolidated Balance Sheets as “Long-term debt due within one year” at September 30, 2020.

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~~15. Supplemental Cash Flow Information~~16. Revenue

Disaggregation of Revenue

The following tables represent a disaggregation of revenue for each reportable segment for the three and nine months ended September 30, 2020 and 2019:



	Three Months Ended September 30, 2020
(In millions)	L&S		G&P		Total
Revenues and other income:
Service revenue	$	87	$	517	$	604
Service revenue - related parties	902		7		909
Service revenue - product related	0		41		41
Product sales	7		158		165
Product sales - related parties	2		35		37
Total revenues from contracts with customers	$	998	$	758	1,756
Non-ASC 606 revenue⁽¹⁾					491
Total revenues and other income					$	2,247



	Three Months Ended September 30, 2019
(In millions)	L&S		G&P		Total
Revenues and other income:
Service revenue	$	95	$	537	$	632
Service revenue - related parties	881		18		899
Service revenue - product related	0		26		26
Product sales	14		157		171
Product sales - related parties	8		24		32
Total revenues from contracts with customers	$	998	$	762	1,760
Non-ASC 606 revenue⁽¹⁾					520
Total revenues and other income					$	2,280

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
—



	Nine Months Ended September 30, 2020
(In millions)	L&S		G&P		Total
Revenues and other income:
Service revenue	$	248	$	1,531	$	1,779
Service revenue - related parties	2,676		18		2,694
Service revenue - product related	0		102		102
Product sales	39		415		454
Product sales - related parties	10		90		100
Total revenues from contracts with customers	$	2,973	$	2,156	5,129
Non-ASC 606 loss⁽¹⁾					191
Total revenues and other income					$	5,320

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	Nine Months Ended September 30, 2019
(In millions)	L&S		G&P		Total
Revenues and other income:
Service revenue	$	260	$	1,605	$	1,865
Service revenue - related parties	2,527		22		2,549
Service revenue - product related	0		86		86
Product sales	40		536		576
Product sales - related parties	17		92		109
Total revenues from contracts with customers	$	2,844	$	2,341	5,185
Non-ASC 606 revenue⁽¹⁾					1,540
Total revenues and other income					$	6,725


(1)	~~Contribution of assets to Sherwood Midstream~~Non-ASC 606 Revenue includes rental income, income/(loss) from equity method investments, derivative gains and ~~Sherwood Midstream Holdings. See Note 4.~~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 or for deficiency payments associated with minimum volume commitments which have not been billed to customers. 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 tables below reflect the changes in our contract balances for the nine-month periods ended September 30, 2020 and 2019:



(In millions)	Balance at December 31, 2019⁽¹⁾		Additions/ (Deletions)			Revenue Recognized⁽²⁾			Balance at September 30, 2020
Contract assets	$	39	$	(9	)	$	(1	)	$	29
Deferred revenue	23		16			(6		)	33
Deferred revenue - related parties	53		77			(60		)	70
Long-term deferred revenue	90		25			0			115
Long-term deferred revenue - related parties	$	55	$	(7	)	$	0		$	48

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(In millions)	Balance at December 31, 2018⁽¹⁾		Additions/ (Deletions)			Revenue Recognized⁽²⁾			Balance at September 30, 2019
Contract assets	$	36	$	(6	)	$	(2	)	$	28
Deferred revenue	13		11			(4		)	20
Deferred revenue - related parties	65		34			(50		)	49
Long-term deferred revenue	56		26			0			82
Long-term deferred revenue - related parties	$	52	$	5		$	0		$	57


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


(2)	NaN significant revenue was recognized related to past performance obligations in the current periods.

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.

As of September 30, 2020, the amounts allocated to contract assets and contract liabilities on the Consolidated Balance Sheets are $264 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 30 years. Further, MPLX does not disclose variable consideration due to volume variability in the table below.



(In millions)
2020	$	461
2021	1,727
2022	1,701
2023	1,591
2024 and thereafter	5,869
Total revenue on remaining performance obligations^(1),(2),(3)	$	11,349


(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.

17. Supplemental Cash Flow Information



	Nine Months Ended September 30,
(In millions)	2020			2019
Net cash provided by operating activities included:
Interest paid (net of amounts capitalized)	$	631		$	648
Income taxes paid	1			0
Non-cash investing and financing activities:
Net transfers of property, plant and equipment (to)/from materials and supplies inventories	(1		)	1
Fair value of common units redeemed for Wholesale Exchange	$	340		$	—

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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:



	Nine Months Ended September 30,
(In millions)	2020			2019
(Decrease)/increase in capital accruals	$	(197	)	$	(67	)

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

~~16.~~18. 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, 2019 through September 30, 2020.



(In millions)	Pension Benefits			Other Post-Retirement Benefits			Total
Balance at December 31, 2019⁽¹⁾	$	(14	)	$	(1	)	$	(15	)
Other comprehensive loss - remeasurements⁽²⁾	0			(1		)	(1		)
Balance at September 30, 2020⁽¹⁾	$	(14	)	$	(2	)	$	(16	)

The following table shows the changes in “Accumulated other comprehensive loss” by component during the period December 31, 2018 through September 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⁾	0			1			1
Balance at September 30, 2019⁽¹⁾	$	(14	)	$	(1	)	$	(15	)


(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.

19. Equity-Based Compensation

Phantom Units–

The following is a summary of phantom unit award activity of MPLX LP common units for the nine months ended September 30, ~~2017~~2020:



	Number of Units		Weighted Average Fair Value
Outstanding at December 31, 2019	1,109,568		$	35.97
Granted	215,677		19.31
Settled	(558,398	)	37.73
Forfeited	(5,383	)	35.87
Outstanding at September 30, 2020	761,464		$	29.96

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~~2020 are hybrid awards having a three-year performance period of January 1, ~~2017~~2020 through December 31, ~~2019.~~2022. 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~~$0.80 per unit for the ~~2017~~2020 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, due to the nature of the award terms, the grant date for this award was not established until the first quarter of 2020 and we began recognizing units and expense related to this award at that time. The performance units granted in 2018 are hybrid awards having a three-year performance period of January 1, 2018 through December 31, 2020. 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 an average of MPLX LP’s distributable cash flow and a market condition based on MPLX LP’s total unitholder return. The market condition was valued using a Monte Carlo valuation, resulting in a grant date fair value of $0.45 per unit for the 2018 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.

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 months ended September 30, ~~2017~~2020:



	Number of Units
Outstanding at December 31, ~~2016~~2019	~~1,799,249~~2,157,347
Granted	~~1,407,062~~2,147,211
Settled	(~~464,500~~1,169,354	)
Forfeited	(~~35,217~~31,668	)
Outstanding at September 30, ~~2017~~2020	~~2,706,594~~3,103,536

20. Leases

During the first quarter of 2020, reimbursements for projects at certain MPLX refining logistics locations were agreed to between MPLX and MPC. These reimbursements relate to the storage services agreements between MPLX and MPC at these locations and required the embedded leases within these agreements to be reassessed under the leasing standard. As a result of the reassessment, one of our leases was reclassified from an operating lease to a sales-type lease. As a result, the underlying assets previously shown on the Consolidated Balance Sheets associated with the sales-type lease were derecognized and the net investment in the lease (i.e., the sum of the present value of the future lease payments and the unguaranteed residual value of the assets) was recorded as a lease receivable. See Note 5 for the location of lease receivables and unguaranteed residual assets on the Consolidated Balance Sheets. The difference between the net book value of the underlying assets and the net investment in the lease has been recorded as a Contribution from MPC in the Consolidated Statements of Equity given that the transaction related to refining logistics was a common control transaction. During the first quarter of 2020, MPLX derecognized approximately $171 million of property, plant and equipment, recorded a lease receivable of approximately $370 million, recorded an unguaranteed residual asset of approximately $10 million and a Contribution from MPC of $209 million.

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~~17.~~

Lease revenues included on the Consolidated Statements of Income were as follows:



	Three Months Ended September 30, 2020				Three Months Ended September 30, 2019
(In millions)	Related Party		Third Party		Related Party		Third Party
Operating leases:
Operating lease revenue⁽¹⁾	$	208	$	70	$	248	$	63

Sales-type leases:
Profit/(loss) recognized at the commencement date	0		0		0		N/A
Interest income (Sales-type lease revenue- fixed minimum)	37		0		3		N/A
Interest income (Revenue from variable lease payments)	$	1	$	0	$	1	N/A



	Nine Months Ended September 30, 2020				Nine Months Ended September 30, 2019
(In millions)	Related Party		Third Party		Related Party		Third Party
Operating leases:
Operating lease revenue⁽¹⁾	$	589	$	199	$	773	$	196

Sales-type leases:
Profit/(loss) recognized at the commencement date	0		0		0		N/A
Interest income (Sales-type lease revenue- fixed minimum)	113		0		3		N/A
Interest income (Revenue from variable lease payments)	$	1	$	0	$	1	N/A


(1)	These amounts are presented net of executory costs.

See Note 5 for additional information on where related party lease assets are recorded in the Consolidated Balance Sheets. Third party lease assets are less than $1 million as of September 30, 2020 and are included within the “Receivables, net” and “Other noncurrent assets” captions within the Consolidated Balance Sheets.

The following is a schedule of future payments on the sales-type leases as of September 30, 2020:



(In millions)	Related Party
2020	$	39
2021	157
2022	157
2023	158
2024	158
2025 and thereafter	473
Total minimum future rentals	1,142
Less: present value discount	723
Lease receivable	$	419

21. 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~~a liability, ~~the Partnership~~MPLX is unable to estimate a range of possible ~~losses for~~ loss because

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the ~~reasons discussed in more detail below.~~issues involved have not been fully developed through pleadings, discovery or court proceedings. 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 30, ~~2017~~2020 and December 31, ~~2016,~~2019, accrued liabilities for remediation totaled ~~$14~~$18 million and $3$19 million, respectively. ~~However, it~~It is not presently possible to estimate the ultimate amount of all remediation costs that might be incurred or the penalties, if any, ~~which~~that may be imposed. At September 30, 2020 and December 31, ~~2016,~~2019, there ~~was less than $1 million in receivables from~~were 0 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.

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. MarkWest Liberty Midstream has submitted a response asserting that this action involves novel issues surrounding primarily minor source emissions from facilities that the agencies themselves considered de minimis and were not the subject of regulation and consequently that 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 $1.24 million and the estimated cost 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.

~~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 onto 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~~ – 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 has objected to this ruling and is seeking an appeal. There are several third-party defendants in the litigation and MPL has 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. While the ultimate outcome of these litigated matters remains uncertain, neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, with respect to this matter can be determined at this time and the Partnership is unable to estimate a reasonably possible loss (or range of losses) for this litigation. Under the omnibus agreement, MPC will indemnify the Partnership 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~~management believes the resolution of these other lawsuits and proceedings will not, individually or collectively, 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 9.19 percent indirect interest in a joint venture (“Dakota Access”) that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects, collectively referred to as the Bakken Pipeline system or DAPL, we have entered into a Contingent Equity Contribution Agreement whereby MPLX LP, along with the other joint venture owners in the Bakken Pipeline system, has 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 the Bakken Pipeline system.

In March 2020, the U.S. District Court for the District of Columbia (the “D.D.C.”) ordered the U.S. Army Corps of Engineers (“Army Corps”), which granted permits and an easement for the Bakken Pipeline system, to conduct a full environmental impact statement (“EIS”), and further requested briefing on whether an easement necessary for the operation of the Bakken Pipeline system should be vacated while the EIS is being prepared.

On July 6, 2020, the D.D.C. ordered vacatur of the easement to cross Lake Oahe during the pendency of an EIS and further ordered a shut down of the pipeline by August 5, 2020. The D.D.C. denied a motion to stay that order. Dakota Access and the Army Corps appealed the D.D.C.’s order to the U.S. Court of Appeals for the District of Columbia Circuit (the “Court of Appeals”). On July 14, 2020, the Court of Appeals issued an administrative stay while the court considered Dakota Access and the Army Corps’ emergency motion for stay pending appeal. On August 5, 2020, the Court of Appeals stayed the D.D.C.’s injunction that required the pipeline be shutdown and emptied of oil by August 5, 2020. The Court of Appeals denied a stay of the D.D.C.’s March order, which required the EIS, and further denied a stay of the D.D.C.’s July order, which vacated the easement. In the D.D.C., briefing is ongoing for a renewed request for an injunction, which is expected to be completed by the end of 2020. Oral argument on the merits of the case at the Court of Appeals occurred on November 4, 2020. The pipeline remains operational.

If the pipeline is temporarily shutdown pending completion of the EIS, MPLX would have to contribute its 9.19 percent pro rata share of funds required to pay interest accruing on the notes and any portion of the principal that matures while the pipeline is shutdown. MPLX also expects to contribute its 9.19 percent pro rata share of any costs to remediate any deficiencies to reinstate the permit and/or return the pipeline into operation. If the vacatur of the easement permit results in a permanent

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shutdown of the pipeline, MPLX would have to contribute its 9.19 percent pro rata share of the cost to redeem the bonds (including the 1% redemption premium required pursuant to the indenture governing the notes) and any accrued and unpaid interest. As of September 30, 2020, our maximum potential undiscounted payments under the Contingent Equity Contribution Agreement were approximately $230 million.

Other Legal Proceedings – In early July, MPLX received a Notification of Trespass Determination from the Bureau of Indian Affairs (“BIA”) relating to a portion of the Tesoro High Plains Pipeline that crosses the Fort Berthold Reservation in North Dakota. The notification covered the rights of way for 23 tracts of land and demanded the immediate cessation of pipeline operations. The notification also assessed trespass damages of approximately $187 million. We appealed this determination, which triggered an automatic stay of the requested pipeline shutdown and payment. On October 29, the Assistant Secretary - Indian Affairs issued an order vacating the BIA’s trespass order and requiring the Regional Director for the BIA Great Plains Region to issue a new decision on or before December 15 covering all 34 tracts at issue.

We continue to work towards a settlement of this matter with holders of the property rights at issue. Management does not believe the ultimate resolution of this matter will have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

Contractual Commitments and Contingencies – At September 30, ~~2017, the Partnership’s~~2020, MPLX’s contractual commitments to acquire property, plant and equipment totaled ~~$520~~$181 million. These commitments ~~at September 30, 2017~~ were primarily related to G&P plant expansion, ~~projects for the Marcellus~~terminal and ~~Southwest Operations.~~pipeline projects. 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 30, ~~2017,~~2020, 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.

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 also be read in conjunction with the unaudited consolidated 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~~2019.

Disclosures Regarding Forward-Looking Statements

This Quarterly Report on Form ~~8-K filed on May 1, 2017.~~

10-Q, particularly Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk, includes ~~various~~ forward-looking statements ~~concerning trends~~that are subject to risks, contingencies or ~~events potentially affecting our business.~~uncertainties. You can identify ~~our~~ forward-looking statements by words such as “anticipate,” “believe,” ~~“estimate,~~“commitment,” ~~“objective,~~“could,” “design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,” “may,” “objective,” “opportunity,” “outlook,” “plan,” “policy,” “position,” “potential,” “predict,” “priority,” “project,” ~~“potential,~~“proposition,” “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~~

Forward-looking statements include, among other things, statements regarding:

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);

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 amount and timing of future distributions; and

the anticipated effects of actions of third parties such as competitors, activist investors 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:

the effects of the ~~Private Securities Litigation Reform Act~~outbreak of ~~1995, these statements are accompanied~~COVID-19, including any related government policies and actions, and the adverse impact thereof on our business, financial condition, results of operations and cash flows, including our growth, operating costs, labor availability, logistical capabilities, customer demand for our services and industry demand generally, cash position, taxes, the price of our securities and trading markets with respect thereto, our ability to access capital markets, and the global economy and financial markets generally;

the ability of Marathon Petroleum Corporation (“MPC”) to achieve its strategic objectives and the effects of those strategic decisions on us;

the risk that anticipated opportunities and any other synergies from or benefits of the Andeavor Logistics LP (“ANDX”) acquisition may not be fully realized or may take longer to realize than expected, including whether the transaction will be accretive within the expected timeframe or at all;

disruption from the ANDX acquisition making it more difficult to maintain relationships with customers, employees or suppliers;

risks relating to any unforeseen liabilities of ANDX;

further impairments;

negative capital market conditions, including an increase of the current yield on common units;

the ability to achieve strategic and financial objectives, including with respect to distribution coverage, future distribution levels, proposed projects and completed transactions;

the success of MPC’s portfolio optimization, including 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;

the adequacy of capital resources and liquidity, including the availability of sufficient cash flow to pay distributions and access to debt on commercially reasonable terms, and the ability to successfully execute business plans, growth strategies and self-funding models;

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

volatility in or degradation of market and industry conditions as a result of the COVID-19 pandemic, including any related policies and actions, other infectious disease outbreaks, natural hazards, extreme weather events, or otherwise;

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

completion of midstream infrastructure by ~~cautionary language identifying important factors, though not necessarily all~~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 MPLX’s commercial agreements;

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

the ability to manage disruptions in credit markets or changes to credit ratings;

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

adverse results in litigation;

the reliability of processing units and other equipment;

the effect of restructuring or reorganization of business components;

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

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

changes in producer customers’ drilling plans or in volumes of throughput of crude oil, natural gas, NGLs, refined products or other hydrocarbon-based products;

non-payment or non-performance by our producer and other customers;

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;

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

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;

expectations regarding joint venture arrangements and other acquisitions or divestitures of assets;

midstream and refining industry overcapacity or under capacity;

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

acts of war, terrorism or civil unrest that could ~~cause future outcomes~~impair our ability to ~~differ materially from those set forth in forward-looking statements.~~ gather, process, fractionate or transport crude oil, natural gas, NGLs or refined products; and

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.

For additional risk factors affecting our business, see ~~Item 1A. Risk Factors~~the risk factors described in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019, as updated in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.

~~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; the 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 highlights including revenues and other ~~highlights~~income, income from operations, net income, adjusted EBITDA attributable to MPLX and DCF attributable to GP and LP unitholders for the three months ended September 30, ~~2017~~2020 and September 30, 2019 are ~~listed~~shown in the chart below. ~~Refer to~~These results include the recast of ANDX financial information into MPLX’s financial information as a result of the Merger. See the Non-GAAP Financial Information section below for the definitions of Adjusted EBITDA and DCF and the Results of Operations ~~and Liquidity and Capital Resources~~section for further ~~details.~~details regarding changes in these metrics.


(1)	Q3 2019 includes Adjusted EBITDA attributable to Predecessor and portion of DCF adjustments attributable to Predecessor.

~~L&S segment operating income attributable to MPLX LP increased approximately $89 million, or 72 percent, for the three months ended September 30, 2017 compared to the same period~~41

Table of ~~2016 due to $74 million from the inclusion of HST, WHC and MPLXT results after our acquisition as of March 1, 2017and$7 million from the acquisition of the Ozark pipeline.~~Contents

G&P segment operating income attributable to MPLX LP increased approximately $56 million, or 19 percent, for the three months ended September 30, 2017 compared to the same period of 2016. The G&P segment realized product price increases and volume increases during the third quarter of 2017 primarily due to expansions in the Southwest as well as growth at the Sherwood, Majorsville and Bluestone (previously referred to as Keystone) plants. Compared to the third quarter of 2016, processing volumes were up approximately 11 percent, fractionated volumes were up approximately 14 percent and gathering volumes were up approximately 13 percent.

~~Additional highlights for the three and nine months ended September 30, 2017, including a look ahead to anticipated growth, are listed below.~~Other Highlights

~~Acquisition and Growth Activities~~RECENT DEVELOPMENTS

On ~~September 27, 2017, MPC authorized an offer~~July 31, 2020, MPLX completed the exchange of ~~MPLX Fuels Distributions LLC and MPLX~~Western Refining ~~Logistics~~Wholesale, LLC to ~~MPLX LP~~Western Refining Southwest, Inc. (“WRSW”), a wholly owned subsidiary of MPC, in exchange for ~~cash and limited and general partnership units.~~the redemption of 18,582,088 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 reviewcommon units held by 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. 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.

WRSW, valued at $340 million.

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~~August 18, 2020, 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 174 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 for 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 production 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~~issued $3 billion aggregate principal amount of new senior notes ~~(the “New Senior Notes”).~~

~~During the nine months ended September 30, 2017, we issued an~~consisting of $1.5 billion aggregate principal amount of ~~13,846,998 commons units under our ATM Program, generating~~1.750 percent senior notes due March 2026 and $1.5 billion aggregate principal amount of 2.650 percent senior notes due August 2030. The net proceeds ~~of approximately $473 million. As of September 30, 2017, $1.7~~were used to repay the $1.0 billion of outstanding borrowings under the MPLX Term Loan Agreement, to repay the $1.0 billion floating rate notes due September 2021, to redeem all of the $450 million aggregate principal amount of 6.375 percent senior notes due May 2024, to reduce amounts outstanding under the MPLX Credit Agreement at the time and to redeem the $300 million aggregate principal amount of 6.250 percent senior notes due October 15, 2022 (these notes were redeemed on October 15, 2020).

On November 1, 2020, MPLX finalized the 2020 Terminal Services Agreement, which replaces and simplifies several existing terminal services agreements which were entered into by subsidiaries of Andeavor and Andeavor Logistics LP. The simplification is expected to have no economic impact to MPLX.

On November 2, 2020, MPLX announced the board authorization of a unit repurchase program for the repurchase of up to $1 billion of MPLX’s outstanding common units held by the public. MPLX may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, tender offers, accelerated unit repurchases or open market solicitations for units, some of which may be effected through Rule 10b5-1 plans. The timing and amount of repurchases, if any, will depend upon several factors, including market and business conditions, and repurchases may be initiated, suspended or discontinued at any time. The repurchase authorization has no expiration date.

Announced a third quarter distribution rate of $0.6875 per common unit.

CURRENT ECONOMIC ENVIRONMENT

The outbreak of COVID-19 and its development into a pandemic in March 2020 has resulted in significant economic disruption globally. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through social distancing have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe. This has significantly reduced global economic activity and resulted in a decline in the demand for products for which we provide midstream services. Macroeconomic conditions and global geopolitical events have also resulted in significant price volatility related to those aforementioned products.

We are actively responding to the impacts that these matters are having on our business by:

Canceling or delaying certain capital expenditures that we had expected to make in 2020

Taking actions to reduce operating expenses across the business

Continuing to evaluate and high-grade our capital portfolio

Many uncertainties remain ~~available for issuance through~~with respect to COVID-19, including its resulting economic effects, and we are unable to predict the ~~ATM Program.~~ultimate economic impacts from COVID-19 and how quickly national economies can recover once the pandemic ultimately subsides. However, the adverse impact will likely continue to have an impact on our business and our customers’ businesses. We believe we have proactively addressed many of the known impacts of COVID-19 to the extent possible and will strive to continue to do so, but there can be no guarantee the measures will be fully effective.

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.

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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~~adjustments as deemed necessary. 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 measures~~this measure 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).

RESULTS OF OPERATIONS

The following ~~table~~tables and discussion isare a summary of our results of operations for the three and nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, 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~~common control transactions.

Table of ~~HST, WHC and MPLXT.~~Contents

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 Variance 2017 2016 Variance
Total revenues and other income $ 980
$ 838
$ 142
$ 2,782
$ 2,181
$ 601
Costs and expenses:
Cost of revenues (excludes items below) 129
122
7
381
329
52
Purchased product costs 170
117
53
441
310
131
Rental cost of sales 19
13
6
44
42
2
Rental cost of sales - related parties —
—
—
1
1
—
Purchases - related parties 114
109
5
330
286
44
Depreciation and amortization 164
151
13
515
438
77
Impairment expense —
—
—
—
130
(130 )
General and administrative expenses 59
56
3
174
172
2
Other taxes 14
12
2
40
37
3
Total costs and expenses 669
580
89
1,926
1,745
181
Income from operations 311
258
53
856
436
420
Related party interest and other financial costs 1
—
1
1
1
—
Interest expense, net of amounts capitalized 77
51
26
217
158
59
Other financial costs 15
13
2
40
37
3
Income before income taxes 218
194
24
598
240
358
Provision (benefit) for income taxes 1
—
1
3
(12 ) 15
Net income 217
194
23
595
252
343
Less: Net income attributable to noncontrolling interests 1
2
(1 ) 3
3
—
Less: Net income attributable to Predecessor —
51
(51 ) 36
149
(113 )
Net income attributable to MPLX LP $ 216
$ 141
$ 75
$ 556
$ 100
$ 456

Adjusted EBITDA attributable to MPLX LP⁽¹⁾
$ 538
$ 375
$ 163
$ 1,435
$ 1,028
$ 407
DCF⁽¹⁾
442
301
141
1,183
822
361
DCF attributable to GP and LP unitholders⁽¹⁾
426
285
141
1,134
797
337


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

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 Variance 2017 2016 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
Non-cash equity-based compensation 4
3
1
10
9
1
Impairment expense —
—
—
—
130
(130 )
Net interest and other financial costs 80
53
27
220
162
58
(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 )
Other adjustments to equity method investment distributions 8
—
8
8
—
8
Unrealized derivative losses (gains)⁽¹⁾
17
2
15
(2 ) 23
(25 )
Acquisition costs 2
—
2
6
(1 ) 7
Adjusted EBITDA 540
441
99
1,487
1,218
269
Adjusted EBITDA attributable to noncontrolling interests (2 ) (2 ) —
(5 ) (3 ) (2 )
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
Deferred revenue impacts 8
1
7
25
8
17
Net interest and other financial costs (80 ) (53 ) (27 ) (220 ) (162 ) (58 )
Maintenance capital expenditures (24 ) (25 ) 1
(59 ) (58 ) (1 )
Other —
(2 ) 2
—
(2 ) 2
Portion of DCF adjustments attributable to Predecessor⁽²⁾
—
5
(5 ) 2
8
(6 )
DCF 442
301
141
1,183
822
361
Preferred unit distributions (16 ) (16 ) —
(49 ) (25 ) (24 )
DCF attributable to GP and LP unitholders $ 426
$ 285
$ 141
$ 1,134
$ 797
$ 337

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



	Three Months Ended September 30,							Nine Months Ended September 30,
(In millions)	2020		2019		Variance			2020			2019		Variance
Total revenues and other income⁽¹⁾	$	2,247	$	2,280	$	(33	)	$	5,320		$	6,725	$	(1,405	)
Costs and expenses:
Cost of revenues (excludes items below)	323		407		(84		)	1,006			1,099		(93		)
Purchased product costs	152		129		23			374			489		(115		)
Rental cost of sales	33		37		(4		)	101			103		(2		)
Rental cost of sales - related parties	32		45		(13		)	119			124		(5		)
Purchases - related parties	297		303		(6		)	853			894		(41		)
Depreciation and amortization	346		302		44			992			916		76
Impairment expense	—		—		—			2,165			—		2,165
General and administrative expenses	96		102		(6		)	289			293		(4		)
Restructuring expenses	36		—		36			36			—		36
Other taxes	33		29		4			94			84		10
Total costs and expenses	1,348		1,354		(6		)	6,029			4,002		2,027
Income/(loss) from operations	899		926		(27		)	(709		)	2,723		(3,432		)
Related party interest and other financial costs	—		5		(5		)	4			8		(4		)
Interest expense, net of amounts capitalized	207		212		(5		)	624			640		(16		)
Other financial costs	17		16		1			49			38		11
Income/(loss) before income taxes	675		693		(18		)	(1,386		)	2,037		(3,423		)
Provision for income taxes	1		4		(3		)	1			2		(1		)
Net income/(loss)	674		689		(15		)	(1,387		)	2,035		(3,422		)
Less: Net income attributable to noncontrolling interests	9		8		1			24			20		4
Less: Net income attributable to Predecessor	—		52		(52		)	—			401		(401		)
Net income/(loss) attributable to MPLX LP	665		629		36			(1,411		)	1,614		(3,025		)

Adjusted EBITDA attributable to MPLX LP (excluding Predecessor results)⁽²⁾	1,335		1,165		170			3,856			3,015		841
Adjusted EBITDA attributable to MPLX LP (including Predecessor results)⁽³⁾	N/A		1,273		N/A			N/A			3,785		N/A
DCF attributable to GP and LP unitholders (including Predecessor results)⁽³⁾	$	1,032	$	997	$	35		$	3,075		$	2,963	$	112


(1)	The ~~Partnership~~nine months ended September 30, 2020 includes impairment expense of approximately $1.3 billion related to three equity method investments.


(2)	Non-GAAP measure. See reconciliation below to the most directly comparable GAAP measures. Excludes adjusted EBITDA and DCF adjustments attributable to Predecessor.


(3)	Non-GAAP measure. See reconciliation below to the most directly comparable GAAP measures. Includes adjusted EBITDA and DCF adjustments attributable to Predecessor.

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	Three Months Ended September 30,									Nine Months Ended September 30,
(In millions)	2020			2019			Variance			2020			2019			Variance
Reconciliation of Adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders from Net income:
Net income/(loss)	$	674		$	689		$	(15	)	$	(1,387	)	$	2,035		$	(3,422	)
Provision for income taxes	1			4			(3		)	1			2			(1		)
Amortization of deferred financing costs	15			10			5			44			29			15
Gain on extinguishment of debt	(14		)	—			(14		)	(14		)	—			(14		)
Net interest and other financial costs	223			223			—			647			657			(10		)
Income from operations	899			926			(27		)	(709		)	2,723			(3,432		)
Depreciation and amortization	346			302			44			992			916			76
Non-cash equity-based compensation	4			5			(1		)	12			17			(5		)
Impairment expense	—			—			—			2,165			—			2,165
(Income)/loss from equity method investments	(83		)	(95		)	12			1,012			(255		)	1,267
Distributions/adjustments related to equity method investments	130			145			(15		)	369			399			(30		)
Unrealized derivative losses/(gains)⁽¹⁾	10			(11		)	21			1			(7		)	8
Restructuring expenses	36			—			36			36			—			36
Acquisition costs	—			9			(9		)	—			14			(14		)
Other	3			1			2			5			1			4
Adjusted EBITDA	1,345			1,282			63			3,883			3,808			75
Adjusted EBITDA attributable to noncontrolling interests	(10		)	(9		)	(1		)	(27		)	(23		)	(4		)
Adjusted EBITDA attributable to Predecessor⁽²⁾	—			(108		)	108			—			(770		)	770
Adjusted EBITDA attributable to MPLX LP⁽³⁾	1,335			1,165			170			3,856			3,015			841
Deferred revenue impacts	29			36			(7		)	92			67			25
Net interest and other financial costs	(223		)	(223		)	—			(647		)	(657		)	10
Maintenance capital expenditures	(41		)	(75		)	34			(108		)	(174		)	66
Maintenance capital expenditures reimbursements	11			18			(7		)	31			34			(3		)
Equity method investment capital expenditures paid out	(5		)	(8		)	3			(16		)	(16		)	—
Restructuring expenses	(36		)	—			(36		)	(36		)	—			(36		)
Other	(3		)	6			(9		)	—			16			(16		)
Portion of DCF adjustments attributable to Predecessor⁽²⁾	—			27			(27		)	—			159			(159		)
DCF	1,067			946			121			3,172			2,444			728
Preferred unit distributions	(35		)	(30		)	(5		)	(97		)	(92		)	(5		)
DCF attributable to GP and LP unitholders	1,032			916			116			3,075			2,352			723
Adjusted EBITDA attributable to Predecessor⁽²⁾	—			108			(108		)	—			770			(770		)
Portion of DCF adjustments attributable to Predecessor⁽²⁾	—			(27		)	27			—			(159		)	159
DCF attributable to GP and LP unitholders (including Predecessor results)	$	1,032		$	997		$	35		$	3,075		$	2,963		$	112

(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.

Table of Contents


(2)	The adjusted EBITDA and DCF adjustments related to Predecessor are excluded from adjusted EBITDA attributable to MPLX LP and DCF attributable to GP and LP unitholders prior to the acquisition date.

(3)

For the three months ended September 30, 2020, the L&S and G&P segments made up $893 million and $442 million of Adjusted EBITDA attributable to MPLX LP, respectively. For the three months ended September 30, 2019, the L&S and G&P segments made up $766 million and $399 million of Adjusted EBITDA attributable to MPLX LP, respectively. For the nine months ended September 30, 2020, the L&S and G&P segments made up $2,604 million and $1,252 million of Adjusted EBITDA attributable to MPLX LP, respectively. For the nine months ended September 30, 2019, the L&S and G&P segments made up $1,895 million and $1,120 million of Adjusted EBITDA attributable to MPLX LP, respectively.



	Nine Months Ended September 30,
(In millions)	2020			2019			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	$	3,336		$	2,990		$	346
Changes in working capital items	(154		)	134			(288		)
All other, net	(6		)	(23		)	17
Non-cash equity-based compensation	12			17			(5		)
Net (loss)/gain on disposal of assets	(1		)	3			(4		)
Gain on extinguishment of debt	(14		)	—			(14		)
Net interest and other financial costs	647			657			(10		)
Current income taxes	2			1			1
Asset retirement expenditures	—			1			(1		)
Unrealized derivative (gains)/losses⁽¹⁾	1			(7		)	8
Restructuring Expenses	36			—			36
Acquisition costs	—			14			(14		)
Other adjustments to equity method investment distributions	19			20			(1		)
Other	5			1			4
Adjusted EBITDA	3,883			3,808			75
Adjusted EBITDA attributable to noncontrolling interests	(27		)	(23		)	(4		)
Adjusted EBITDA attributable to Predecessor⁽²⁾	—			(770		)	770
Adjusted EBITDA attributable to MPLX LP⁽³⁾	3,856			3,015			841
Deferred revenue impacts	92			67			25
Net interest and other financial costs	(647		)	(657		)	10
Maintenance capital expenditures	(108		)	(174		)	66
Maintenance capital expenditures reimbursements	31			34			(3		)
Equity method investment capital expenditures paid out	(16		)	(16		)	—
Restructuring Expenses	(36		)	—			(36		)
Other	—			16			(16		)
Portion of DCF adjustments attributable to Predecessor⁽²⁾	—			159			(159		)
DCF	3,172			2,444			728
Preferred unit distributions	(97		)	(92		)	(5		)
DCF attributable to GP and LP unitholders	3,075			2,352			723
Adjusted EBITDA attributable to Predecessor⁽²⁾	—			770			(770		)
Portion of DCF adjustments attributable to Predecessor⁽²⁾	—			(159		)	159
DCF attributable to GP and LP unitholders (including Predecessor results)	$	3,075		$	2,963		$	112

(1)


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


(3)	For the nine months ended September 30, 2020, the L&S and G&P segments made up $2,604 million and $1,252 million of Adjusted EBITDA attributable to MPLX LP, respectively. For the nine months ended September 30, 2019, the L&S and G&P segments made up $1,895 million and $1,120 million of Adjusted EBITDA attributable to MPLX LP, respectively.

Table of Contents

Three months ended September 30, ~~2017~~2020 compared to three months ended September 30, ~~2016~~2019

Total revenues and other income ~~increased $142~~decreased $33 million in the third quarter of ~~2017~~2020 compared to the same period of ~~2016.~~2019. This ~~variance~~decrease was primarily due ~~mainly~~ to ~~increased pricing on product sales of approximately $54 million,~~lower G&P fees from lower volumes in the Southwest and lower prices in the Bakken and Rockies. This was partially offset by ~~an increased unrealized derivative loss of $10 million,~~ higher ~~revenues~~G&P fees from ~~volume growth of $49 million~~higher volumes in the Rockies and higher prices in the Southwest, Marcellus and ~~the Southwest areas,higher crude and 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~~Southern Appalachia. There were also decreases due to the ~~acquisition of an equity interest in the~~Wholesale Exchange and lower L&S pipeline, terminal and storage volumes, including decreased throughputs on our Explorer and Bakken ~~Pipeline system, the addition of the Sherwood Midstream joint venture during 2017 and increased dry gas gathering volumes for certain of our~~pipeline equity method investments. These decreases were partially offset by favorable L&S rate impacts, increased volume deficiency payments and favorable impacts from increased marine equipment.

Cost of ~~revenues increased $7~~Revenues decreased $84 million in the third quarter of ~~2017~~2020 compared to the same period of ~~2016.~~2019. This ~~variance~~ was primarily due to lower operating costs due to lower throughput, lower project-related spend, the ~~acquisition of the Ozark pipeline.~~Wholesale Exchange as well as other miscellaneous decreases.

Purchased product costs increased ~~$53~~$23 million in the third quarter of ~~2017~~2020 compared to the same period of ~~2016.~~2019. This ~~variance~~ was primarily due to ~~higher NGL~~an increase of $20 million related to unrealized derivative gains in the prior year compared to unrealized derivative losses in the current year and ~~gas~~higher prices of ~~$36~~$21 million ~~and increased volumes of $10 million, primarily~~ in the Southwest, ~~area, as well as an increase~~partially offset by lower volumes of $21 million in the ~~unrealized loss~~Southwest.

Rental cost of ~~$6 million, of which a majority is~~sales - related ~~to our Natural Gas Embedded Derivative.~~

~~Depreciation and amortization expense increased~~parties decreased $13 million in the third quarter of ~~2017~~2020 compared to the same period of ~~2016.~~2019. This ~~variance~~ was primarily due to ~~additions~~lower operating costs due to ~~in-service~~reduced throughput as well as decreased project spend from overall cost reduction initiatives.

Purchases - related parties decreased $6 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to aligning various expenses as a result of the ANDX acquisition as well as the Wholesale Exchange.

Depreciation and amortization expense increased $44 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to write-offs of assets under construction of $27 million related to idled MPC refineries as well as property, plant and equipment placed in service in the fourth quarter of 2019 and the first nine months of 2020.

General and administrative expenses decreased $6 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to decreased employee costs from MPC as well as ~~approximately $2~~acquisition costs incurred in 2019.

Restructuring expenses increased $36 million in the third quarter of ~~accelerated depreciation related~~2020 compared to ~~adjustments~~the same period of ~~certain assets’ useful life.~~2019. This was due to cost cutting measures employed by MPC during the third quarter of 2020 which resulted in restructuring charges, some of which were allocated to MPLX based on impacted employees.

Net interest expense and other financial costs ~~increased $28~~decreased $9 million in the third quarter of ~~2017~~2020 compared to the same period of ~~2016. The increase is mainly~~2019. This was primarily due to decreased interest on variable rate debt as a result of lower interest rates during the ~~New Senior Notes issued in February 2017.~~quarter, as well as from the repayment of debt with higher interest rates and the issuance of new senior notes at lower interest rates.

Nine months ended September 30, ~~2017~~2020 compared to nine months ended September 30, ~~2016~~2019

Total revenues and other income ~~increased $601~~decreased $1,405 million in the first nine months of ~~2017~~2020 compared to the same period of ~~2016.~~2019. This ~~variance~~ was ~~due mainly to the inclusion of $103 million of revenue generated~~primarily driven by ~~MPLXT and its subsidiaries since it was not formed as a business until April 1, 2016~~our ownership in MarkWest Utica EMG, L.L.C. (“MarkWest Utica EMG”), ~~increased pricing on product sales of approximately $177 million as well as higher revenues from volume growth of $146 million~~our indirect ownership in ~~the Marcellus and the Southwest areas~~, ~~higher crude and product transportation volumes of $28 million~~, ~~$45 million from the acquisition of the Ozark pipelineand 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~~Ohio Gathering Company, L.L.C. through our investment in ~~Ohio Condensate~~MarkWest Utica EMG and our ownership in Uintah Basin Field Services, L.L.C., as ~~referenced~~we recognized impairments related to these investments in the first quarter of 2020 in the amount of $1,264 million. Also contributing to the decrease was lower fees from lower volumes in the Southwest and Rockies, and lower prices in all of the G&P regions partially offset by increased volumes in the Marcellus. There were also decreases due to lower L&S pipeline, terminal and storage volumes, including decreased throughputs on our ~~Annual Report on Form 10-K for the year ended December 31, 2016, as updated~~Explorer and Bakken pipeline equity method investments which were offset by ~~our Current Report on Form 8-K filed on May 1, 2017.~~favorable L&S rate impacts, increased volume deficiency payments and favorable impacts from increased marine equipment.

Cost of ~~revenues increased $52~~Revenues decreased $93 million in the first nine months of ~~2017~~2020 compared to the same period of ~~2016. This variance was~~2019, primarily due to ~~$20 million from~~lower project-related costs, which include repairs, maintenance and operating costs in the ~~inclusion of MPLXT~~, L&S and G&P segments, as well as ~~$20 million~~ from the ~~acquisition~~Wholesale Exchange.

Table of ~~the Ozark pipeline and an increase in expenses related to the timing of projects.~~Contents

Purchased product costs ~~increased $131~~decreased $115 million in the first nine months of ~~2017~~2020 compared to the same period of ~~2016.~~2019. This ~~variance~~ was primarily due to ~~higher NGL~~lower prices of $73 million in the Southwest and ~~gas prices~~Southern Appalachia and ~~purchase~~$52 million from lower volumes in the ~~Southwest area,~~Southwest. This was offset by ~~a $13~~an increase of $8 million due to unrealized ~~gain on our Natural Gas Embedded Derivative.~~derivative gains in the prior year compared to unrealized derivative losses in the current year.

~~Purchases-related~~Purchases - related parties ~~increased $44~~decreased $41 million in the first nine months of ~~2017~~2020 compared to the same period of ~~2016. The increase~~2019. This was primarily due to aligning various expenses as a result of the ~~inclusion of approximately $23 million related party~~ANDX acquisition, lower product purchases ~~of MPLXT as well as general increases in employee~~from MPC attributable to the Wholesale Exchange, lower project spend and decreased other miscellaneous costs ~~due to headcount.~~from MPC.

Depreciation and amortization expense increased ~~$77~~$76 million in the first nine months of ~~2017~~2020 compared to the same period of ~~2016.~~2019. 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~~placed in service in the fourth quarter of ~~2016~~2019 and the first nine months of ~~2017.~~2020 as well as write-offs of assets under construction of $27 million related to idled MPC refineries.

Impairment expense ~~decreased $130~~increased $2,165 million in the first nine months of ~~2017~~2020 compared to the same period of ~~2016.~~2019. During the first quarter of 2020 we recorded impairment expense for goodwill, intangible assets and property, plant and equipment of $1,814 million, $177 million and $174 million, respectively. The impairment of goodwill related to our Eastern G&P reporting unit while the intangible asset and property, plant and equipment impairments relate to certain assets in our Southwest region. The impairments were primarily driven by the slowing of drilling activity, which has reduced production growth forecasts from our producer customers.

Restructuring expenses increased $36 million in the first nine months of 2020 compared to the same period of 2019. This ~~variance~~ was due to ~~a non-cash impairment~~cost cutting measures employed by MPC during the third quarter of 2020 which resulted in restructuring charges, some of which were allocated to ~~goodwill in two reporting units~~MPLX based on impacted employees.

Other taxes increased $10 million in the ~~G&P segment during the~~ first ~~six~~nine months of ~~2016.~~2020 compared to the same period of 2019 primarily due to refunds and credits related to prior periods.

Net interest expense and other financial costs ~~increased $62~~decreased $9 million in the first nine months of ~~2017~~2020 compared to the same period of ~~2016. The increase is~~2019. This was primarily due to decreased interest on variable rate debt as a result of lower interest rates during the ~~New Senior Notes issued in February 2017.~~year, as well as from the repayment of debt with higher interest rates and the issuance of new senior notes at lower interest rates.

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 ~~allocated~~believed to be allocable or controlled by the segment; or (iii) not 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.~~

~~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 September 30, 2017 compared to three months ended September 30, 2016~~

~~In the third quarter of 2017 compared to the same period of 2016, segment revenue increased primarily due to a $14 million increase from higher crude and product transportation volumes~~, ~~a $19 million increase from the acquisition of the Ozark pipeline,~~a $4 million increase from the annual increase in fees and a $4 million increase from additional barges, partially offset by a $2 million decrease in the recognition of revenue related to volume deficiency payments.

~~In the third quarter of 2017 compared to the same period of 2016, segment cost of revenues increasedprimarily due to a $12 million increase from the acquisition of the Ozark pipeline, as well as from salaries and compensation due to headcount and other miscellaneous expenses.~~

In the third quarter of 2017 compared to the same period of 2016, the segment portion attributable to noncontrolling interests and Predecessor decreased due to the acquisition 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 compared to the same period of 2016, segment revenue increased primarily due to the inclusion 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 compared to the same period of 2016, segment cost of revenues increased primarily due to the acquisitions of MPLXT and the Ozark pipeline, increased expenses related to the timing of projects, salaries and compensation due to headcount, and other miscellaneous expenses.

In the first nine 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.

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

(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

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 it becomes impossible to physically transport volumes necessary to utilize the accumulated credits or upon expiration of the make-up period. Deficiency payments are included in the determination of DCF in the period in which a deficiency occurs.

~~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 September 30, 2017 compared to three months ended September 30, 2016~~

In the third quarter of 2017 compared to the same period of 2016, segment revenue increased due to increased pricing on product sales of approximately $46 million and increased volumes of $15 million, combined with increased fees of approximately $41 million on 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.

In the third quarter of 2017 compared to the same period of 2016, segment cost of revenues increased primarily due to increased product costs resulting from higher NGL and gas prices of $28 million and increased volumes of $10 million primarily in the Southwest area partially offset by lower maintenance costs and other operating efficiencies.

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

In the first nine months of 2017 compared to the same period of 2016, segment revenue increased due to increased pricing on product sales of approximately $144 million and increased volumes of $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 of 2017 compared to the same period of 2016, segment cost of revenues increased due primarily to increased product costs resulting from higher prices of approximately $102 million and higher volumes of $21 million primarily in the Southwest area partially offset by lower facility costs due to lower maintenance costs and other operating efficiencies.

~~Segment Reconciliations~~

The following tables provide reconciliations of segment operating income to our consolidated income from operations, segment revenue to our consolidated total revenues and other income, and segment portion attributable to noncontrolling interests to our consolidated net income attributable to noncontrolling interestssegments for the three and nine months ended September 30, ~~2017~~2020 and ~~2016. Adjustments related to unconsolidated affiliates relate to our Partnership-operated non-wholly-owned entities that we consolidate~~2019. Prior period financial information has been retrospectively adjusted for ~~segment purposes. Income (loss) from equity method investments~~relates to our portion of income (loss) from our unconsolidated joint ventures 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.common control transactions.

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

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L&S Segment

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)	~~The Partnership~~Includes adjusted EBITDA attributable to Predecessor.



	Three Months Ended September 30,									Nine Months Ended September 30,
(In millions)	2020			2019			Variance			2020			2019			Variance
Service revenue	$	989		$	976		$	13		$	2,924		$	2,787		$	137
Rental income	249			304			(55		)	737			935			(198		)
Product related revenue	9			22			(13		)	49			57			(8		)
Income from equity method investments	36			60			(24		)	126			159			(33		)
Other income	51			17			34			154			45			109
Total segment revenues and other income	1,334			1,379			(45		)	3,990			3,983			7
Cost of revenues	173			262			(89		)	601			707			(106		)
Purchases - related parties	219			216			3			629			633			(4		)
Depreciation and amortization	164			113			51			440			373			67
General and administrative expenses	55			59			(4		)	159			152			7
Restructuring expenses	27			—			27			27			—			27
Other taxes	19			16			3			53			43			10
Segment income from operations	677			713			(36		)	2,081			2,075			6
Depreciation and amortization	164			113			51			440			373			67
Income from equity method investments	(36		)	(60		)	24			(126		)	(159		)	33
Distributions/adjustments related to equity method investments	55			70			(15		)	169			184			(15		)
Restructuring expenses	27			—			27			27			—			27
Acquisition costs	—			9			(9		)	—			14			(14		)
Non-cash equity-based compensation	3			3			—			8			10			(2		)
Other	3			1			2			5			1			4
Adjusted EBITDA attributable to Predecessor	—			(83		)	83			—			(603		)	603
Segment adjusted EBITDA⁽¹⁾	893			766			127			2,604			1,895			709

Capital expenditures	118			272			(154		)	410			700			(290		)
Investments in unconsolidated affiliates	$	4		$	95		$	(91	)	$	132		$	163		$	(31	)


(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 30, 2020 compared to three months ended September 30, 2019

Service revenue increased $13 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to a $21 million increase due to the reclassification of lease income between service revenue, rental income and other income based on modifications to lease contracts, a $10 million increase from additional marine equipment, an increase in

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volume deficiency payments, favorable price impacts and other miscellaneous items. These increases were partially offset by reduced pipeline and storage volumes and an $8 million decrease due to the Wholesale Exchange.

Rental income decreased $55 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to a decrease of $55 million due to the reclassification of lease income between service revenue, rental income and other income based on modifications to lease contracts.

Product related revenue decreased $13 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to the Wholesale Exchange.

Income from equity method investments decreased $24 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to decreased throughput on the Explorer and Bakken pipelines during 2020.

Other income increased $34 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to the reclassification of lease income between service revenue, rental income and other income based on modifications to lease contracts.

Cost of revenues decreased $89 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to lower operating costs due to lower throughput, lower project-related spend, the Wholesale Exchange as well as other miscellaneous expense decreases.

Depreciation and amortization increased $51 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to write-offs of assets under construction of $27 million related to idled MPC refineries as well as property, plant and equipment placed in service in the fourth quarter of 2019 and the first nine months of 2020.

Restructuring expenses increased $27 million in the third quarter of 2020 compared to the same period of 2019. This was due to cost cutting measures employed by MPC during the third quarter of 2020 which resulted in restructuring charges, some of which were allocated to MPLX based on impacted employees.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019

Service revenue increased $137 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to a $104 million increase due to the reclassification of lease income between service revenue, rental income and other income based on modifications to lease contracts and a $35 million increase from additional marine equipment. There were also increases related to volume deficiency payments and favorable price impacts partially offset by unfavorable volume impacts and an $8 million decrease due to the Wholesale Exchange.

Rental income decreased $198 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to a decrease of $214 million due to the reclassification of lease income between service revenue, rental income and other income based on modifications to lease contracts. The decrease was partially offset by increased terminal storage revenue as well as other miscellaneous increases.

Product related revenue decreased $8 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to the Wholesale Exchange.

Income from equity method investments decreased $33 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to decreased throughput on the Explorer and Bakken pipelines during 2020.

Other income increased $109 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to the reclassification of lease income between service revenue, rental income and other income based on modifications to lease contracts.

Cost of revenues decreased $106 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to lower operating costs due to lower throughput, lower project-related spend, a decrease of $7 million from the Wholesale Exchange as well as other miscellaneous expense decreases.

Depreciation and amortization increased $67 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to property, plant and equipment placed in service in the fourth quarter of 2019 and the first nine months of 2020 as well as write-offs of assets under construction of $27 million related to idled MPC refineries.

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General and administrative expenses increased $7 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to increased employee costs from MPC, partially offset by a decrease due to transaction costs incurred in 2019 related to the ANDX acquisition.

Restructuring expenses increased $27 million in the first nine months of 2020 compared to the same period of 2019. This was due to cost cutting measures employed by MPC during the third quarter of 2020 which resulted in restructuring charges, some of which were allocated to MPLX based on impacted employees.

Other taxes increased $10 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to refunds and credits related to prior periods.

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G&P Segment


(1)	Includes adjusted EBITDA attributable to Predecessor.



	Three Months Ended September 30,									Nine Months Ended September 30,
(In millions)	2020			2019			Variance			2020			2019			Variance
Service revenue	$	524		$	555		$	(31	)	$	1,549		$	1,627		$	(78	)
Rental income	94			88			6			271			260			11
Product related revenue	234			207			27			607			714			(107		)
Income/(loss) from equity method investments	47			35			12			(1,138		)	96			(1,234		)
Other income	14			16			(2		)	41			45			(4		)
Total segment revenues and other income	913			901			12			1,330			2,742			(1,412		)
Cost of revenues	215			227			(12		)	625			619			6
Purchased product costs	152			129			23			374			489			(115		)
Purchases - related parties	78			87			(9		)	224			261			(37		)
Depreciation and amortization	182			189			(7		)	552			543			9
Impairment expense	—			—			—			2,165			—			2,165
General and administrative expenses	41			43			(2		)	130			141			(11		)
Restructuring expenses	9			—			9			9			—			9
Other taxes	14			13			1			41			41			—
Segment income/(loss) from operations	222			213			9			(2,790		)	648			(3,438		)
Depreciation and amortization	182			189			(7		)	552			543			9
Impairment expense	—			—			—			2,165			—			2,165
(Income)/loss from equity method investments	(47		)	(35		)	(12		)	1,138			(96		)	1,234
Distributions/adjustments related to equity method investments	75			75			—			200			215			(15		)
Restructuring expenses	9			—			9			9			—			9
Unrealized derivative losses/(gains)⁽¹⁾	10			(11		)	21			1			(7		)	8
Non-cash equity-based compensation	1			2			(1		)	4			7			(3		)
Adjusted EBITDA attributable to Predecessor	—			(25		)	25			—			(167		)	167
Adjusted EBITDA attributable to noncontrolling interests	(10		)	(9		)	(1		)	(27		)	(23		)	(4		)
Segment Adjusted EBITDA⁽²⁾	442			399			43			1,252			1,120			132

Capital expenditures	131			321			(190		)	375			953			(578		)
Investments in unconsolidated affiliates	$	18		$	76		$	(58	)	$	112		$	331		$	(219	)

(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 %

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~~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~~See the Reconciliation of Adjusted EBITDA attributable to MPLX LP and ~~other types of arrangements tied~~DCF attributable to ~~both NGL~~GP and ~~natural gas prices.~~


~~(3)~~	~~Includes unconsolidated affiliates (See Note 4 of~~LP unitholders from Net income table for the ~~Notes~~reconciliation to ~~Consolidated Financial Statements).~~the most directly comparable GAAP measure.

Three months ended September 30, 2020 compared to three months ended September 30, 2019

Service revenue decreased $31 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to lower fees from lower volumes in the Southwest and Rockies of $22 million, a decrease from lower prices in the Bakken and Rockies of $6 million as well as other miscellaneous decreases.

Rental income increased $6 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to higher fees related to gathering contracts in the Marcellus.

Product related revenue increased $27 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to higher prices in the Southwest, Marcellus and Southern Appalachia of approximately $23 million and higher volumes in the Rockies of $21 million, partially offset by and lower volumes in the Southwest of $15 million and lower prices in the Rockies and Bakken of $11 million, as well as other miscellaneous increases.

Income from equity method investments increased $12 million in the third quarter of 2020 compared to the same period of 2019. This increase was due to lower basis differential amortization related to MarkWest Utica EMG as a result of impairments recorded in the first quarter of 2020 and an increase from the Sherwood Midstream LLC joint venture due to additional plants coming online during the second half of 2019.

Cost of revenues decreased $12 million in the third quarter of 2020 compared to the same period of 2019. This decrease is attributable to lower repairs, maintenance and operating costs in the Southwest and Marcellus.

Purchased product costs increased $23 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to an increase of $20 million related to unrealized derivative gains in the prior year compared to unrealized derivative losses in the current year and higher prices of $21 million in the Southwest, partially offset by lower volumes of $21 million in the Southwest.

Purchases - related parties decreased $9 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to aligning various expenses as a result of the ANDX acquisition.

Depreciation and amortization decreased $7 million in the third quarter of 2020 compared to the same period of 2019. This was primarily due to the impairment of intangible assets and property, plant and equipment during the first quarter of 2020 which has resulted in less depreciation expense in the current period when compared to prior periods.

Restructuring expenses increased $9 million in the third quarter of 2020 compared to the same period of 2019. This was due to cost cutting measures employed by MPC during the third quarter of 2020 which resulted in restructuring charges, some of which were allocated to MPLX based on impacted employees.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019

Service revenue decreased $78 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to lower fees from lower volumes in the Rockies and Southwest of $40 million as well as other miscellaneous decreases.

Rental income increased $11 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to higher fees related to gathering contracts in the Marcellus.

Product related revenue decreased $107 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to lower prices in all of the G&P regions of approximately $154 million and lower volumes of $42 million in the Southwest. This was partially offset by $42 million of volume increases in the Marcellus, Rockies and the Javelina plant in the Southwest (this plant experienced downtime for maintenance in 2019), as well as other miscellaneous increases.

Income from equity method investments decreased $1,234 million in the first nine months of 2020 compared to the same period of 2019. The ~~following table presents a reconciliation~~large decrease was driven by our ownership in MarkWest Utica EMG, our indirect ownership in Ohio Gathering Company, L.L.C. through our investment in MarkWest Utica EMG and our ownership in Uintah Basin Field Services, L.L.C., as we recognized impairments related to these investments in the first quarter of ~~net operating margin to income from operations,~~2020 in the ~~most directly comparable GAAP financial measure.~~amount of $1,264

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)~~

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.


~~(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.

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million. This was partially offset by an increase in the Sherwood Midstream LLC joint venture due to additional plants coming online during the second half of 2019.

Cost of revenues increased $6 million in the first nine months of 2020 compared to the same period of 2019. The majority of the increase is attributable to aligning various expenses as a result of the ANDX acquisition offset by lower repairs, maintenance and operating costs in the Southwest, Southern Appalachia and Marcellus.

Purchased product costs decreased $115 million in the first nine months of 2020 compared to the same period of 2019. This was primarily due to lower prices of $73 million in the Southwest and Southern Appalachia and $52 million from lower volumes in the Southwest. This was offset by an increase of $8 million due to unrealized derivative gains in the prior year compared to unrealized derivative losses in the current year.

Purchases - related parties decreased $37 million in the first nine months of 2020 compared to the same period of 2019. This decrease is primarily attributable to aligning various expenses as a result of the ANDX acquisition.

Depreciation and amortization increased $9 million in the first nine months of 2020 compared to the same period of 2019 primarily due to property, plant and equipment placed in service in the fourth quarter of 2019 and the first nine months of 2020 partially offset by the impairment of intangible assets and property, plant and equipment during the first quarter of 2020 which has resulted in less depreciation expense in the current period when compared to prior periods.

Impairment expense increased $2,165 million in the first nine months of 2020 compared to the same period of 2019. During the first quarter of 2020 we recorded impairment expense for goodwill, intangible assets and property, plant and equipment of $1,814 million, $177 million and $174 million, respectively. The impairment of goodwill related to our Eastern G&P reporting unit while the intangible asset and property, plant and equipment impairments relate to certain assets in our Southwest region. The impairments were primarily driven by the slowing of drilling activity, which has reduced production growth forecasts from our producer customers.

General and administrative expenses decreased $11 million in the first nine months of 2020 compared to the same period of 2019 due to lower employee related costs.

Restructuring expenses increased $9 million in the first nine months of 2020 compared to the same period of 2019. This was due to cost cutting measures employed by MPC during the third quarter of 2020 which resulted in restructuring charges, some of which were allocated to MPLX based on impacted employees.

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~~are 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~~including variations in weather patterns from year to year. ~~However, we~~We are able to manage the seasonality ~~impact~~impacts through the execution of our marketing ~~strategy. We have access to up to 50 million gallons of propane~~strategy and via our 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.~~capabilities. Overall, our exposure to ~~the seasonal~~seasonality fluctuations ~~in the commodity markets~~ is ~~declining due to our growth in fee-based business.~~minimal.

5554

Table of Contents

OPERATING DATA⁽¹⁾

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 September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
L&S
Pipeline throughput (mbpd)
Crude oil pipelines	3,077		3,367		3,007		3,240
Product pipelines	1,613		1,859		1,701		1,875
Total pipelines	4,690		5,226		4,708		5,115

Average tariff rates ($ per barrel)⁽²⁾
Crude oil pipelines	$	0.96	$	0.97	$	0.96	$	0.94
Product pipelines	0.85		0.77		0.82		0.73
Total pipelines	$	0.93	$	0.90	$	0.91	$	0.86

Terminal throughput (mbpd)	2,701		3,292		2,696		3,267

Marine Assets (number in operation)⁽³⁾
Barges	301		264		301		264
Towboats	23		23		23		23

Table of Contents

$q3gpfractionationthroughput.jpg$



	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
	MPLX LP⁽⁴⁾	MPLX LP Operated⁽⁵⁾	MPLX LP⁽⁴⁾	MPLX LP Operated⁽⁵⁾
G&P
Gathering Throughput (MMcf/d)
Marcellus Operations	1,312	1,312	1,271	1,271
Utica Operations	—	1,816	—	2,381
Southwest Operations	1,413	1,479	1,653	1,653
Bakken Operations	130	130	149	149
Rockies Operations	481	659	627	827
Total gathering throughput	3,336	5,396	3,700	6,281

Natural Gas Processed (MMcf/d)
Marcellus Operations	4,222	5,706	4,264	5,300
Utica Operations	—	530	—	866
Southwest Operations	1,377	1,439	1,667	1,667
Southern Appalachian Operations	227	227	254	254
Bakken Operations	129	129	149	149
Rockies Operations	481	481	568	568
Total natural gas processed	6,436	8,512	6,902	8,804

C2 + NGLs Fractionated (mbpd)
Marcellus Operations⁽⁶⁾	477	477	433	433
Utica Operations⁽⁶⁾	—	30	—	49
Southwest Operations	21	21	19	19
Southern Appalachian Operations⁽⁷⁾	11	11	13	13
Bakken Operations	25	25	29	29
Rockies Operations	3	3	4	4
Total C2 + NGLs fractionated⁽⁸⁾	537	567	498	547

Table of Contents



	Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
	MPLX LP⁽⁴⁾	MPLX LP Operated⁽⁵⁾	MPLX LP⁽⁴⁾	MPLX LP Operated⁽⁵⁾
G&P
Gathering Throughput (MMcf/d)
Marcellus Operations	1,372	1,372	1,273	1,273
Utica Operations	—	1,840	—	2,186
Southwest Operations	1,445	1,491	1,618	1,618
Bakken Operations	137	137	149	149
Rockies Operations	523	706	639	835
Total gathering throughput	3,477	5,546	3,679	6,061

Natural Gas Processed (MMcf/d)
Marcellus Operations	4,177	5,582	4,211	5,218
Utica Operations	—	587	—	835
Southwest Operations	1,479	1,543	1,608	1,608
Southern Appalachian Operations	231	231	244	244
Bakken Operations	137	137	149	149
Rockies Operations	512	512	575	575
Total natural gas processed	6,536	8,592	6,787	8,629

C2 + NGLs Fractionated (mbpd)
Marcellus Operations⁽⁶⁾	466	466	431	431
Utica Operations⁽⁶⁾	—	32	—	45
Southwest Operations	16	16	13	13
Southern Appalachian Operations⁽⁷⁾	12	12	12	12
Bakken Operations	25	25	22	22
Rockies Operations	4	4	4	4
Total C2 + NGLs fractionated⁽⁸⁾	523	555	482	527



	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Pricing Information
Natural Gas NYMEX HH ($ per MMBtu)	$	2.13	$	2.33	$	1.92	$	2.57
C2 + NGL Pricing ($ per gallon)⁽⁹⁾	$	0.45	$	0.44	$	0.40	$	0.53


(1)	~~Pipeline throughput and tariff rates as~~Operating data is inclusive of ~~September 30, 2016 have been retrospectively adjusted to reflect the acquisition of HST.~~operating data for ANDX.


(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~~This column represents operating data for entities that ~~are shown~~have been consolidated ~~for segment purposes only.~~into the MPLX financial statements.

(5)

~~Includes approximately two MMcf/d related to~~This column represents operating data for entities that have been consolidated into the ~~unconsolidated~~MPLX financial statements as well as operating data for MPLX-operated 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.investments.

(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~~Ohio Fractionation’s portion utilized of the jointly owned Hopedale Fractionation Complex. ~~The~~ Utica Operations includes ~~Utica’s~~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 2040 mbpd of capacity in the Hopedale 3 ~~fractionator.~~and Hopedale 4 fractionators.


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

(8)

Purity ethane makes up approximately ~~164~~193 mbpd and ~~160~~182 mbpd of total MPLX Operated, fractionated products for the three months ended September 30, 2020 and 2019, respectively, and approximately 192 mbpd and 189 mbpd of total fractionated products for the ~~three and~~ nine months ended September 30, ~~2017,~~2020 and 2019, respectively. Purity ethane makes up approximately 188 mbpd and 172 mbpd of total MPLX LP consolidated, fractionated products for the three months ended September 30, 2020 and 2019, respectively, and approximately ~~137~~186 mbpd and ~~125~~179 mbpd of total fractionated products for the ~~three and~~ nine months ended September 30, ~~2016,~~2020 and 2019, 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.

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Our cash and cash equivalents ~~balance was $3~~were $28 million at September 30, ~~2017 compared to $234~~2020 and $15 million at December 31, ~~2016.~~2019. 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,						Nine Months Ended September 30,
(In millions)	2017			2016			2020			2019
Net cash provided by (used in):
Operating activities	$	1,338		$	975		$	3,336		$	2,990
Investing activities	(1,837		)	(892		)	(1,060		)	(2,189		)
Financing activities	268			82			(2,263		)	(845		)
Total	$	(231	)	$	165		$	13		$	(44	)

Net cash provided by operating activities increased ~~$363~~$346 million in the first nine months of ~~2017~~2020 compared to the first nine months of ~~2016, the majority of which is related to an increase in~~2019, primarily due net income 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 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.for non-cash items.

Net cash used in investing activities ~~increased $945~~decreased $1,129 million in the first nine months of ~~2017~~2020 compared to the first nine months of ~~2016,~~2019, primarily due to the acquisition of an equity interest in the Bakken Pipeline system for $513 million, 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 equipmentdecreased spending related to ~~various~~the capital ~~projects, as well as a net decrease of $23 million in investment loans with MPC. Partially offsetting these items was~~budget, a return of capital ~~of $24 million~~ from our ~~acquisition of~~investments in Wink to Webster and Whistler and decreased contributions to equity ~~interests in Sherwood Midstream and Sherwood Midstream Holdings.~~method investments.

Financing activities were a ~~$268~~$2,263 million ~~source~~use of cash in the first nine months of ~~2017~~2020 compared to ~~a $82~~an $845 million ~~source~~use of cash in the first nine months of ~~2016.~~2019. The source of cash in the first nine months of 2017 was primarily due to $2.2 billion of net proceeds from the New Senior Notes, $420 million of proceeds under the bank revolving credit facility, $128 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~~primary reason for ~~the acquisition of HST, WHC, MPLXT and the Joint-~~

~~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~~the use of cash was due to lower net borrowings in the current year for third party obligations as well as ~~a 10 percent increase~~net repayments on the MPC Loan Agreement in the ~~distribution per limited partner unit.~~current year compared to net borrowing in the prior year.

Debt and Liquidity Overview

On August 18, 2020, MPLX issued $3 billion aggregate principal amount of new senior notes consisting of $1.5 billion aggregate principal amount of 1.750 percent senior notes due March 2026 and $1.5 billion aggregate principal amount of 2.650 percent senior notes due August 2030. The net proceeds were used to repay the $1.0 billion of outstanding borrowings under the MPLX Term Loan Agreement, to repay the $1.0 billion floating rate notes due September 2021, to redeem all of the $450 million aggregate principal amount of 6.375 percent senior notes due May 2024, to reduce amounts outstanding under the MPLX Credit Agreement at the time and to redeem the $300 million aggregate principal amount of 6.250 percent senior notes due October 15, 2022 (these notes were redeemed on October 15, 2020).

Our outstanding borrowings at September 30, ~~2017 and December 31, 2016 consisted~~2020 consist of the following:

(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%, 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



(In millions)	September 30, 2020			December 31, 2019
MPLX LP:
Bank revolving credit facility	$	95		$	—
Term loan facility	—			1,000
Floating rate senior notes	1,000			2,000
Fixed rate senior notes	19,506			16,887
Consolidated subsidiaries:
MarkWest	23			23
ANDX	121			190
Financing lease obligations	12			19
Total	20,757			20,119
Unamortized debt issuance costs	(118		)	(106		)
Unamortized discount/premium	(290		)	(300		)
Amounts due within one year	(307		)	(9		)
Total long-term debt due after one year	$	20,042		$	19,704

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 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) 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. As of September 30, 2017, we were in compliance with this financial covenant with a ratio of Consolidated Total Debt to Consolidated EBITDA of 3.4 to 1.0, as well as other covenants contained in the MPLX Credit Agreement 2022. As disclosed in Note 2 of the Notes to Consolidated Financial Statements, we expect the adoption of the lease accounting standards update to result 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.

Our intention is to maintain an investment grade credit profile. As of September 30, ~~2017,~~2020, the credit ratings on our senior unsecured debt were at or above investment grade level as follows:



Rating Agency		Rating
Moody’s		~~Baa3 (stable~~Baa2 (negative outlook)
Standard & Poor’s		~~BBB- (stable~~BBB (negative outlook)
Fitch		~~BBB- (stable~~BBB (negative 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 Term Loan Agreement contain certain representations and warranties, affirmative and restrictive covenants and events of default that we consider to be usual and customary for an agreement of this type. The financial covenant requires MPLX 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) for the prior four fiscal quarters of no greater than 5.0 to 1.0 (or 5.5 to 1.0 during the six-month period 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 assets and entering into transactions with affiliates. As of September 30, 2020, we were in compliance with the covenants, including the financial covenant with a ratio of Consolidated Total Debt to Consolidated EBITDA of 3.9 to 1.0.

The agreements governing our debt obligations 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~~could, among other things, increase the applicable interest rates and other fees payable under the MPLX Credit Agreement ~~2022~~ and may limit our ~~flexibility~~ability to obtain future ~~financing.~~financing, including refinancing existing indebtedness.

Our liquidity totaled ~~$2.1~~$4.9 billion at September 30, ~~2017~~2020 consisting of:


	September 30, 2017							September 30, 2020
(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
MPC Investment - loan agreement	500		(202		)	298
Bank revolving credit facility due 2024⁽¹⁾								$	3,500	$	(95	)	$	3,405
MPC Loan Agreement								1,500		—			1,500
Total liquidity	$	2,750	$	(625	)	$	2,125	$	5,000	$	(95	)	4,905
Cash and cash equivalents						3							28
Total liquidity						$	2,128						$	4,933


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

We expect our ongoing sources of liquidity to include cash generated from operations and borrowings under ~~our revolving credit agreements~~the MPC Loan Agreement, the MPLX Credit Agreement and ~~issuances of additional debt and equity securities.~~access to capital markets. 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

On July 31, 2020, MPLX completed the exchange of Western Refining Wholesale, LLC to Western Refining Southwest, Inc. (“WRSW”), a wholly owned subsidiary of MPC, in exchange for the redemption of 18,582,088 MPLX common units held by WRSW, valued at $340 million.

Common units

The table below summarizes the changes in the number of units outstanding through September 30, ~~2017:~~2020:

(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, 2019	1,058,355,471
Unit-based compensation awards	395,091
Units redeemed in Wholesale Exchange	(18,582,088	)
Balance at September 30, 2020	1,040,168,474

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

~~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 months ended September 30, ~~2017, the sale of~~2020, we issued no common units under ~~the~~our ATM ~~Program generated net proceeds of approximately $473 million.~~program. As of September 30, ~~2017,~~2020, $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.Distributions

We intend to pay ~~at least the~~a minimum quarterly distribution to the holders of our common units of $0.2625 per unit, or $1.05 per ~~quarter, which equates~~unit on an annualized basis, to ~~$109~~the extent we have sufficient cash from our operations after the establishment of cash reserves and the payment of costs and expenses, including reimbursements of expenses to our general partner. The amount of distributions paid under our policy and the decision to make any distributions is determined by our general partner, taking into consideration the terms of our partnership agreement. Such minimum distribution would equate to $273 million per quarter, or ~~$436~~$1,092 million per year, based on the number of common ~~and general partner~~ units outstanding at September 30, ~~2017.~~2020. On October ~~25, 2017,~~27, 2020, we announced the board of directors of our general partner had declared a distribution of ~~$0.5875~~$0.6875 per unit that will be paid on November ~~14, 2017~~13, 2020 to unitholders of record on November 6, ~~2017.~~2020. This ~~represents an increase of $0.0250 per unit, or four percent, above~~is consistent with the second quarter ~~2017~~2020 distribution of ~~$0.5625~~$0.6875 per unit and an increase of 141.5 percent over the third quarter ~~2016~~2019 distribution. This ~~increase in the distribution is consistent with our intent to maintain an attractive distribution growth profile over an extended period of time.~~rate will also be received by Series A preferred unitholders. 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.

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, or the first business day thereafter, up to and including February 15, 2023. After February 15, 2023, the holders of Series B preferred units are entitled to receive cumulative, quarterly distributions payable in arrears on the 15th day of February, May, August and November of each year, or the first business day thereafter, based on a floating annual rate equal to the three-month LIBOR plus 4.652 percent, in each case assuming a distribution is declared by the Board of Directors. Accordingly, a cash distribution payment totaling $21 million was paid to Series B unitholders on August 17, 2020.

TexNew Mex units are entitled to receive quarterly distribution payments in an amount calculated using the distributable cash flow generated by a particular portion of the TexNew Mex pipeline system, in excess of a base amount and adjusted for previously agreed upon stipulations and contingencies. Distributions earned by TexNew Mex units during the fourth quarter of 2019 and during the six months ended June 30, 2020 were immaterial. Distributions of $5 million were earned by TexNew Mex units during the three months ended September 30, 2020.

The allocation of total quarterly cash distributions ~~to general and limited partners~~ is as follows for the three and nine months ended September 30, ~~2017~~2020 and ~~2016. Our~~2019. 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.

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Distribution declared:
Limited partner units - public $ 170
$ 135
$ 481
$ 393
Limited partner units - MPC 54
44
152
114
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
Redeemable preferred units 16
16
49
25
Total distribution declared $ 336
$ 249
$ 926
$ 680

Cash distributions declared per limited partner common unit $ 0.5875
$ 0.5150
$ 1.6900
$ 1.5300



	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per unit data)	2020		2019		2020		2019
Distribution declared:
Limited partner units - public	$	270	$	266	$	810	$	718
Limited partner units - MPC	445		438		1,348		1,201
Total LP distribution declared	715		704		2,158		1,919
Series A preferred units	20		20		61		61
Series B preferred units	10		10		31		31
Total distribution declared	745		734		2,250		2,011

Cash distributions declared per limited partner common unit	$	0.6875	$	0.6775	$	2.0625	$	2.0025

Our intentions regarding the distribution growth profile expressed above include forward-looking statements. Such forward-looking statements are not guarantees 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 million of annual EBITDA took place in the first quarter of 2017 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.

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



	Nine Months Ended September 30,
(In millions)	2020			2019
Capital expenditures:
Maintenance	$	108		$	174
Maintenance reimbursements	(31		)	(34		)
Growth	677			1,479
Growth reimbursements	(2		)	(17		)
Total capital expenditures	752			1,602
Less: (Decrease)/increase in capital accruals	(197		)	(67		)
Asset retirement expenditures	—			1
Additions to property, plant and equipment, net of reimbursements⁽¹⁾	949			1,668
Investments in unconsolidated affiliates	244			494
Acquisitions	—			(6		)
Total capital expenditures and acquisitions	1,193			2,156
Less: Maintenance capital expenditures (including reimbursements)	77			140
Acquisitions	—			(6		)
Total growth capital expenditures⁽²⁾	$	1,116		$	2,022


(1)	~~Includes amounts related~~This amount is represented in the Consolidated Statements of Cash Flows as Additions to ~~unconsolidated, Partnership-operated subsidiaries.~~property, plant and equipment after excluding growth and maintenance reimbursements. Reimbursements are shown as Contributions from MPC within the Financing activities section of the Consolidated Statements of Cash Flows.

(2)

~~This represents estimated~~Amount excludes contributions from noncontrolling interests of zero and $94 million for the nine months ended September 30, 2020 and 2019, respectively, as reflected in the financing section of our statement of cash flows. Also excludes a $69 million return of capital from our Wink to Webster Pipeline joint venture ~~partners’ share~~in the first quarter of ~~growth capital.~~2020, a $41 million return of capital from our Whistler Pipeline joint venture in the second quarter of 2020 and a $2 million return of capital from our Rio Pipeline joint venture in the third quarter of 2020. These are reflected in the investing section of our statement of cash flows for the nine months ended September 30, 2020.

Our organic growth capital plan range has not been revised for the remainder of 2017. We anticipate finishing the year near below the previously reported range. This range excludes acquisition costs for the dropdowns of HST, WHC, MPLXT and the Joint-Interest Acquisition, the acquisition 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. 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 includes the development of various crude oil 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. We continuously evaluate our capital plan and make changes as conditions warrant.

Contractual Cash Obligations

As of September 30, ~~2017,~~2020, 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 months ended September 30, ~~2017,~~2020, our third-party long-term debt obligations increased by ~~$4.1 billion due to~~$645 million while obligations on our MPC Loan Agreement decreased by $594 million. In connection with the ~~new senior notes issued and contracts to acquire property, plant and equipment increased $317 million largely due to new and growing projects.~~Wholesale Exchange, future purchase obligations decreased by approximately $7.2 billion. These commitments included fuel costs associated with the wholesale product supply agreement with MPC. There were no other material changes to these obligations outside the ordinary course of business since December 31, ~~2016.~~2019.

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 21. 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 30, ~~2017,~~2020, MPC owned our non-economic general partnership interest and held ~~a two~~approximately 62 percent ~~GP Interest and a 28.4 percent limited partner interest in MPLX LP.~~of our outstanding common units.

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 3655 percent and 4054 percent of our total revenues and other income for the third quarter of ~~2017~~2020 and ~~2016,~~2019, 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 2231 percent and 2530 percent for the third quarter of ~~2017~~2020 and ~~2016,~~2019, 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~~2019 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 30, ~~2017,~~2020, 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.~~2019.

CRITICAL ACCOUNTING ESTIMATES

As of September 30, ~~2017,~~2020, 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,~~2019, except as ~~updated by~~noted below.

Impairment Assessments of Long-Lived Assets, Intangible Assets, Goodwill and Equity Method Investments

Fair value calculated for the purpose of testing our ~~Current Report~~long-lived assets, intangible assets, goodwill and equity method investments for impairment is estimated using the expected present value of future cash flows method and comparative market prices when appropriate. Significant judgment is involved in performing these fair value estimates since the results are based on ~~Form 8-K filed~~forecasted assumptions. Significant assumptions include:

•

Future Operating Performance. Our estimates of future operating performance are based on our analysis of various supply and demand factors, which include, among other things, industry-wide capacity, our planned utilization rate, end-user demand, capital expenditures and economic conditions as well as commodity prices. Such estimates are consistent with those used in our planning and capital investment reviews.

•

Future volumes. Our estimates of future throughput of crude oil, natural gas, NGL and refined product volumes are based on internal forecasts and depend, in part, on assumptions about our customers’ drilling activity which is inherently subjective and contingent upon a number of variable factors (including future or expected pricing considerations), many of which are difficult to forecast. Management considers these volume forecasts and other factors when developing our forecasted cash flows.


•	Discount rate commensurate with the risks involved. We apply a discount rate to our cash flows based on a variety of factors, including market and economic conditions, operational risk, regulatory risk and political risk. This discount rate is also compared to recent observable market transactions, if possible. A higher discount rate decreases the net present value of cash flows.


•	Future capital requirements. These are based on authorized spending and internal forecasts.

Assumptions about the effects of COVID-19 and the macroeconomic environment are inherently subjective and contingent upon the duration of the pandemic and its impact on ~~May 1, 2017.~~the macroeconomic environment, which is difficult to forecast. We base our fair value estimates on projected financial information which we believe to be reasonable. However, actual results may differ from these projections.

The need to test for impairment can be based on several indicators, including a significant reduction in prices of or demand for commodities, a poor outlook for profitability, a significant reduction in pipeline throughput volumes, a significant reduction in natural gas or NGL volumes processed, other changes to contracts or changes in the regulatory environment in which the asset or equity method investment is located.

~~ACCOUNTING STANDARDS NOT YET ADOPTED~~

No impairment triggers were identified in the second or third quarters of 2020, however, during the first quarter of 2020, we identified an impairment trigger relating to asset groups within our Western G&P reporting unit as a result of significant impacts to forecasted cash flows for these asset groups resulting from the first quarter events and circumstances as discussed in Note 21 of the Notes to Consolidated Financial Statements. The cash flows associated with these assets were significantly impacted by volume declines reflecting decreased forecasted producer customer production as a result of lower commodity prices. After assessing each asset group within the Western G&P reporting unit for impairment, only the East Texas G&P asset group had a carrying value in excess of the fair value of its underlying assets. As a result, an impairment of $174 million of property, plant and equipment and $177 million of intangibles was recorded to “Impairment expense” on the Consolidated Statements of Income for the first quarter of 2020. Fair value of our PP&E was determined using a combination of an income and cost approach. The income approach utilized significant assumptions including management’s best estimates of the expected future cash flows and the estimated useful life of the asset group. The cost approach utilized assumptions for the current replacement costs of similar assets adjusted for estimated depreciation and deterioration of the existing equipment and economic obsolescence. The fair value of the intangibles was determined based on applying the multi-period excess earnings method, which is an income approach. Key assumptions included management’s best estimates of the expected future cash flows from existing customers, customer attrition rates and the discount rate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of our impairment analysis will prove to be an accurate prediction of the future. The fair value measurements for the asset group fair values represent Level 3 measurements.

Additionally, in order to strengthen the competitive position of MPC’s assets and in response to continued decreased demand for their products, on August 3, 2020, MPC announced their decision to indefinitely idle the Gallup and Martinez refineries and plans to evaluate possibilities to strategically reposition the Martinez refinery, including the potential conversion of the refinery into a renewable diesel facility. While no impairment was identified as a result of this announcement for MPLX, we will continue to monitor for both impairment and potential changes in useful lives of assets related to these refineries.

Unlike long-lived assets, goodwill must be tested for impairment at least annually, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Goodwill is tested for impairment at the reporting unit level. A goodwill impairment loss is measured as the amount by which a reporting unit’s carrying value exceeds its fair value, without exceeding the recorded amount of goodwill.

The “Current Economic Environment” section describes the effects that the outbreak of COVID-19 and its development into a pandemic and the decline in commodity prices have had on our business. Due to these developments in the first quarter of 2020, we performed impairment assessments as discussed further below.

Prior to performing our goodwill impairment assessment as of March 31, 2020, MPLX had goodwill totaling approximately $9,536 million. As part of that assessment, MPLX recorded approximately $1,814 million of impairment expense in the first quarter of 2020 related to our Eastern G&P reporting unit within the G&P operating segment, which brought the amount of goodwill recorded within this reporting unit to zero. The impairment was primarily driven by updated guidance related to the slowing of drilling activity which has reduced production growth forecasts from our producer customers. For the remaining reporting units with goodwill, we determined that no significant adjustments to the carrying value of goodwill were necessary. The interim impairment assessment resulted in the fair value of the reporting units exceeding their carrying value by percentages ranging from approximately 8.5 percent to 270.0 percent. The reporting unit whose fair value exceeded its carrying amount by 8.5 percent, our Crude Gathering reporting unit, had goodwill totaling $1.1 billion at March 31, 2020. The operations which make up this reporting unit were acquired through the merger with ANDX. MPC accounted for its October 1, 2018 acquisition of Andeavor (through which it acquired control of ANDX), using the acquisition method of accounting, which required Andeavor assets and liabilities to be recorded by MPC at the acquisition date fair value. The Merger was closed on July 30, 2019 and has been treated as a common control transaction, which required the recognition of assets acquired and liabilities assumed using MPC’s historical carrying value. As such, given the short amount of time from when fair value was established to the date of the impairment test, the amount by which the fair value exceeded the carrying value within this reporting unit is not unexpected. An increase of one percentage point to the discount rate used to estimate the fair value of this reporting unit would not have resulted in goodwill impairment as of March 31, 2020. No other reporting units had had fair values exceeding carrying values of less than 20 percent. There were no events or changes in circumstances noted in the second

or third quarters of 2020 which would indicate it is more likely than not that the fair value of our reporting units with goodwill is less than their carrying amount.

Significant assumptions used to estimate the reporting units’ fair value included estimates of future cash flows and market information for comparable assets. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the impairment tests will prove to be an accurate prediction of the future. See Note 12 of the Notes to Consolidated Financial Statements for additional information relating to goodwill.

Equity method investments are assessed for impairment whenever factors indicate an other than temporary loss in value. Factors providing evidence of such a loss include the fair value of an investment that is less than its carrying value, absence of an ability to recover the carrying value or the investee’s inability to generate income sufficient to justify our carrying value. During the first quarter of 2020, we assessed certain of our equity method investments for impairment as a result of a number of first quarter events and circumstances as discussed in Note 1 of the Notes to Consolidated Financial Statements. As a result, we recorded an other than temporary impairment for three joint ventures in which we have an interest. Impairment of these investments was $1,264 million, of which $1,251 million was related to MarkWest Utica EMG, L.L.C. and its investment in Ohio Gathering Company, L.L.C. The fair value of the investments was determined based upon applying the discounted cash flow method, which is an income approach. The discounted cash flow fair value estimate is based on known or knowable information at the interim measurement date. The significant assumptions that were used to develop the estimate of the fair value under the discounted cash flow method include management’s best estimates of the expected future cash flows, including prices and volumes, the weighted average cost of capital and the long-term growth rate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As such, the fair value of these equity method investments represents a Level 3 measurement. As a result, there can be no assurance that the estimates and assumptions made for purposes of the impairment test will prove to be an accurate prediction of the future. The impairment was recorded through “Income from equity method investments.” The impairments were largely due to a reduction in forecasted volumes gathered and processed by the systems operated by the joint ventures. At September 30, 2020 we had $4,081 million of equity method investments recorded on the Consolidated Balance Sheets.

An estimate of the sensitivity to net income resulting from impairment calculations is not practicable, given the numerous assumptions (e.g., pricing, volumes and discount rates) that can materially affect our estimates. That is, unfavorable adjustments to some of the above listed assumptions may be offset by favorable adjustments in other assumptions. See Note 4 of the Notes to Consolidated Financial Statements for additional information relating to equity method investments.

ACCOUNTING STANDARDS NOT YET ADOPTED

While new financial accounting pronouncements will be effective for our financial statements in the ~~future.~~future, there are no standards that have not yet been adopted that are expected to have a material impact on our financial statements. Accounting standards are discussed in Note 2 of the Notes to Consolidated Financial Statements.

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Table of Contents

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 September 30, 2020, 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 months ended September 30, ~~2017~~2020 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.~~2019.

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, 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 ~~contracts.~~contract. The changes in fair value of this compound embedded derivative are based on the difference between the contractual and index pricing and the probability of the producer customer exercising its option to ~~extend and the estimated favorability of these contracts compared to current market conditions.~~extend. The changes in fair value are recorded in earnings through ~~Purchased~~“Purchased product ~~costs~~ incosts” on the Consolidated Statements of Income. As of September 30, ~~2017,~~2020 and December 31, 2019, the estimated fair value of this contract was a liability of ~~$52 million.~~$61 million and $60 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 30, ~~2017, the estimated fair value~~2020, 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.

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 September 30, 2020⁽¹⁾		Change in Fair Value⁽²⁾		Change in Income Before Income Taxes for the Nine Months Ended September 30, 2020⁽³⁾
Long-term debt
Long-term debt (including amounts due within one year)
Fixed-rate	$	7,199	$	575	N/A		$	20,626	$	1,831	N/A
Variable-rate	$	420	N/A		$	2	$	1,095	$	19	$	24



(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



	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



	Nine Months Ended September 30, 2017
(In millions)	MarkWest Utica EMG		Other VIEs		Non-VIEs		Total
Revenues and other income	$	137	$	49	$	178	$	364
Costs and expenses	72		29		115		216
Income from operations	65		20		63		148
Net income	65		19		28		112
Income from equity method investments⁽¹⁾	6		7		16		29



	September 30, 2017
(In millions)	MarkWest Utica EMG⁽¹⁾		Other VIEs		Non-VIEs		Total
Current assets	$	72	$	47	$	379	$	498
Noncurrent assets	2,092		878		4,614		7,584
Current liabilities	37		55		492		584
Noncurrent liabilities	2		12		562		576



	Three 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)	$	88		$	232		$	16	$	336
Undistributed net loss attributable to MPLX LP	(2		)	(118		)	—		(120		)
Net income attributable to MPLX LP⁽¹⁾	$	86		$	114		$	16	$	216
Weighted average units outstanding:
Basic	8			394			31		433
Diluted	8			395			31		434
Net income attributable to MPLX LP per limited partner unit:
Basic				$	0.29
Diluted				$	0.29



(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	)


~~(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.



Period	Total Number of Units Purchased^(a)	Average Price Paid per Unit^(a)		Total Number of Units Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Units that May Yet Be Purchased Under the Plans or Programs
07/01/2020-07/31/2020	18,582,088	$	18.30	—	$	—
08/01/2020-08/31/2020	—	—		—	—
09/01/2020-09/30/2020	—	—		—	—
Total	18,582,088	18.30		—



	MPLX LP

	By:	MPLX GP LLC
		Its general partner

Date: ~~October 30, 2017~~November 6, 2020	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)

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)