March 2, 2017 [OPIS] - Marathon Petroleum today concluded a deal whereby it dropped a large share of terminals, pipeline and storage assets to its logistics affiliate MPLX for $2.015 billion.
Included are 62 light product terminals holding about 24 million bbl of storage capacity; 11 pipeline systems hauling fuel some 604 miles; 73 tanks with 7.8 million bbl of storage; a crude oil truck-unloading facility at the Canton refinery and eight natural gas liquids storage caverns in Michigan with 1.8 million bbl of capacity.
“This drop-down of additional high-quality logistics assets to MPLX represents the first of several drops expected to occur in 2017, and is an important part of our plan to unlock the value of our midstream business for investors,” said MPC Chairman, President and CEO Gary R. Heminger. “The stable, fee-based earnings from these assets will add scale and diversification to MPLX`s portfolio of high-quality midstream assets.”
The purchase price from MPLX equates to eight times the multiple of $250 million of EBITDA that the assets are expected to generate in the next 12 months.
Today’s moves were largely anticipated by the investment community and estimates are that another $9.25 billion of assets will eventually be dropped down from parent to affiliate. There was no word on where Marathon stands in terms of a possible Speedway spinoff, which was recommended by some activist shareholder groups. Marathon is in the middle stages of a strategic review of the Speedway business, including the possibility of a tax-free separation.
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