Marathon Petroleum Corp.’s two master limited partnerships (MLP) MPLX LP and Andeavor Logistics LP agreed Wednesday to combine in a transaction with an estimated equity value of $9 billion to enhance midstream prospects across the Lower 48.
MPLX LP and Andeavor own and operate gathering, processing, and fractionation assets across the country, as well as crude and light product transportation and logistics infrastructure.
MPLX has a strong footprint in the Marcellus and Utica shales and a growing presence in the Permian Basin. Andeavor, which Marathon Petroleum acquired last year, has integrated assets across the western and Midcontinent regions, also with a big presence in the Permian.
"This transaction simplifies our MLPs into a single listed entity and creates a leading, large-scale, diversified midstream company anchored by fee-based cash flows," said CEO Gary R. Heminger. “The combined entity will have an expanded geographic footprint, which we believe enhances our long-term growth opportunities and the sustainable cash flow profile of the business.
“We are confident about the midstream growth and value-creation opportunities that exist across this combined platform in the best basins in the U.S."
Mike Hennigan would remain president of the combined entity and lead all midstream activities.
MPLX would continue to provide services with fee-based cash flow, expanding its export capabilities and leveraging existing assets for third parties. The deal also is expected to enhance the project backlog with a broader footprint that combines commercial efforts.
The transaction, set to be completed by year’s end, has been unanimously approved by each board.