MPLX LP (MPLX) Q2 Results - August 8

[dan_s]

MPLX is a very large midstream MLP in our High Yield Income Portfolio.

Comments below are from Stifel

MPLX LP (MPLX, $27.12, Buy; Target $37.00) by Selman Akyol

MPLX: Closed on ANDX, LongHaul Infrastructure is the Focus with Refined Budget

MPLX LP announced in line 2Q19 results. Following the ANDX closing, management established strategic initiatives to optimize spending, sell non-core assets and utilize excess capital to reduce debt or increase capital returning to investors. As a result, we project $2.0 billion of spending in FY20 relative to combined guidance of $2.6 billion which management suggested will be reduced. In turn, we estimate in FY20 MPLX would have ~$2.3 billion in free cash flow. Spending will also be focused on the L&S segment as opportunities slow in the Northeast.
Their BANGL projects are in line to be sanctioned, although we question the ability to receive commitments given competition and significant NGL infrastructure coming online in the near-term.
ANDX closing is positive and management immediately announced a strategic review which should be value accretive.
We are maintaining our Buy rating and target price of $37.00.