MPLX LP Aktie

Welcome to the MPLX First Quarter 2026 Earnings Call. My name is Julie, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian. Kristina, you may begin.

Welcome to MPLX's First Quarter 2026 Earnings Conference Call. The slides that accompany this call can be found on our website at mplx.com under the Investor tab. Joining me on the call today are Maryann Mannen, President and CEO; Chris Hagedorn, CFO; and other members of the executive team. We invite you to read the safe harbor statement on Slide 2. We will be making forward-looking statements today. Actual results may differ. Factors that could cause actual results to differ are included there as well as in our filings with the SEC. With that, I will turn the call over to Maryann.

Thanks, Kristina. Good morning, and thank you for joining our call. MPLX delivered over $1.7 billion of adjusted EBITDA, which enabled a return of over $1.1 billion to our unitholders. 2026 is a year of execution with multiple investments expected to transition from construction to operations and EBITDA generation. With Secretary at ONE coming online in April, Harmon Creek III in the third quarter and the Titan gas treating complex reaching over 400 million cubic feet per day of treating capacity in the fourth quarter. This gives us confidence that year-over-year growth in 2026 will exceed that of 2025.

The underlying fundamentals in natural gas and NGLs remain strong. We see strategic opportunity to support increasing demand for these commodities. As an example, in the Delaware Basin of the Permian we treated over 150 million cubic feet per day of our committed producer sour gas at our recently acquired Titan facility. Our third acid gas injection well in the Delaware Basin is expected to be completed in the third quarter. The expansion of the Titan complex is on schedule. Downstream, the 200 million cubic feet per day Secretary at ONE processing plant has entered service. Last quarter, we announced our intention to further expand our gas processing footprint with Secretary at TWO, an additional 300 million cubic feet per day of capacity expected online in the second half of 2028. Once in service, our total processing capacity in the basin will reach approximately 1.7 billion cubic feet per day. These investments meaningfully strengthen our position in the Delaware Basin, supporting activity in the low-cost sour gas windows and extending the competitiveness of our broader value chain.

The Blackcomb natural gas pipeline continues to progress as planned, and is expected to enter service in the fourth quarter. Demand for firm takeaway capacity is driving expansions on several long-haul natural gas pipelines. Volume commitments from top-tier shippers underscore the competitiveness of our footprint as well as the long-term durability of our natural gas system. Within NGL, the expansion of the BANGL pipeline to 300,000 barrels per day is expected online in the fourth quarter, providing critical takeaway capacity as in-basin NGL volumes grow.

Construction across our Gulf Coast fractionation and export facilities continues to advance on time and on budget. Our fully integrated NGL value chain provides high confidence in the volumes, utilization and durability of cash flow these assets will generate for years to come. Against the backdrop of ongoing geopolitical uncertainty the strategic importance of U.S. energy infrastructure has never been clear. Global demand for secure, reliable energy continues to grow, and the international customers are increasingly more dependent on the United States as a preferred supplier. MPLX is exceptionally well positioned to capitalize on this opportunity.

Our joint venture LPG export terminal is favorably located along the Gulf Coast, providing meaningful, competitive and logistical advantages. In the Marcellus, construction of Harmon Creek III remains on track for a third quarter in-service date increasing our total processing capacity to 8.1 billion cubic feet per day in the Northeast. This project, along with our associated gathering and compression expansion enhances our ability to meet producer needs in liquids-rich areas and supports long-term throughput growth. Beyond 2026, the opportunity set for natural gas and NGLs remains robust. We are deploying 90% of our $2.4 billion organic growth capital plan toward these opportunities which will drive continued mid-single-digit growth.

Now let me turn the call over to Chris to discuss our operational and financial results for the quarter.

Thanks, Maryann. Slide 8 outlines the first quarter operational and financial performance highlights for our Crude Oil & Products Logistics segment. Segment adjusted EBITDA increased $14 million when compared to the first quarter of 2025. The increase was primarily driven by higher rates across the business units, partially offset by lower crude pipeline throughputs. Pipeline volumes decreased 4% year-over-year, primarily due to Marathon's refining turnaround and maintenance activities in the Midwest and Gulf Coast regions. Terminal volumes also decreased 4% year-over-year, primarily due to less favorable market dynamics and refining industry turnaround activity in the first quarter.

Moving on to Slide 9. Segment adjusted EBITDA decreased $42 million compared to the first quarter of 2025. 2025 included a onetime $37 million benefit associated with the customer agreement. The decrease was primarily driven by a $45 million impact from divestiture of our noncore gathering and processing assets in 2025, lower natural gas liquids prices and higher operating expenses. These factors offset growth from equity affiliates and increased volumes inclusive of acquisitions.

Excluding the impacts of our noncore Rockies divestiture, gathering volumes were up 10% year-over-year due to production growth in the Utica and Permian, including acquisitions. Processing volumes increased 2% year-over-year, primarily due to increased production in the Marcellus in the Permian. Marcellus processing utilization was 94% for the quarter, demonstrating the need for incremental capacity as Harmon Creek III is positioned to come online on a just-in-time basis in the third quarter. Total fractionation volumes decreased 3% year-over-year, primarily due to lower ethane recovery in the Marcellus as a result of elevated regional gas prices in the first quarter.

Winter Storm in January impacted crude oil and natural gas production volumes resulting in a roughly $13 million headwind to our first quarter results. We would like to extend our gratitude to our teams in the field whose around the efforts for continuous safe and reliable operations at our MPLX assets during the storm. Thank you to our team. Across our business for every $0.05 change in weighted average NGL price, MPLX expects approximately a $20 million annual impact to segment adjusted EBITDA. During the first quarter, to manage this exposure, MPLX executed an economic hedge on 80% of this risk and recognize the negative mark-to-market of $56 million during the quarter. This impact will offset -- be offset by physical gains over the course of 2026.

As a reminder, the first quarter is typically our lowest quarter for project-related expenses. While we expect these expenses in 2026 will be flat versus the prior year, we anticipate a sequential increase of $50 million in the second quarter, reflecting the seasonality of this project-related work. Now let me hand it back to Maryann for some concluding thoughts.

Thanks, Chris. MPLX has a proven history of executing on our commitments and delivering consistent financial performance. Through disciplined capital deployment and optimization of our integrated value chain, we have sustained strong EBITDA growth and maintained a robust return profile. This track record supports our confidence in our ability to continue creating value for unitholders through both organic project execution and reliable capital returns.

Our long-term strategy is straightforward, and we are executing with discipline, operate safely and reliably, grow through high-return investments, optimize our integrated value chains and to maintain a strong financial foundation. The actions we have taken to position MPLX over the last several years are delivering strong results. The strength of our base business continues to deliver steady durable growth as we progress through 2026, we expect the investments we are making to provide a clear path to continued mid-single-digit growth, and we continue to evaluate both organic and inorganic opportunities to drive income generation. With this momentum, we remain confident in our outlook and committed to creating exceptional value for our unitholders.

Now let me turn the call over to Kristina.

Thanks, Maryann. As we open the call for your questions, as a courtesy to all participants, we ask that you limit yourself to 1 question and a follow-up. If time permits, we will reprompt for additional questions. With that, operator, we are ready for questions today. .

[Operator Instructions] Our first question comes from John Mackay with Goldman Sachs.

Look in the back half of last year, you were talking about considerably higher EBITDA growth for '26 over '25. First quarter was flattish. I understand some of the moving pieces you guys gave on the cost side. And then you've walked us through the project ramp timelines. But could you spend a little bit more time walking us through how we should think about the EBITDA ramp through the year and kind of getting to that maybe above mid-single-digit target you laid out last call? .

And you're correct. And as we were talking about in 2025, we continue to see growth '25, '26, if you let me to look at it first on an annual basis, '25 to '26 growth rate to be stronger than we saw '24 to '25. And as you well said, that growth for us is more back half weighted for 2026 than front half weighted. If you look at it over a 3-year period, our mid-single-digit growth has trended right around that 7.5% range. So I mentioned in a couple of my opening remarks there, Secretary at ONE now in service. And so obviously, we'll see that EBITDA strength coming online throughout the back half of this year. We typically see a 9- to 12-month ramp, we could see that in a little more narrow window as we look at Secretary at ONE. I also talked about Harmon Creek III. That project remains on track to enter service in the third quarter. I think you know this. It's a 300 million cubic feet per day gas processing plant. It also includes construction of a second 40,000 barrel a day DS, and it gives total Northeast gas processing and fractionation capacity to a total of 8.1 and 800,000 barrels a day, respectively, when that project comes online. A few other projects, as you know, will lean in. So the back half of the year, we expect to be stronger clearly than the first half of the year. And we see good line of sight to that, which also continues to give us confidence, frankly, in our 12.5% distribution increase. As you know, we've been talking about that for 2026 as well and 2027. And again, we remain confident in these projects delivering a little bit longer term, as you know, we've got our fractionation '28, '29 coming online and the export dock. That project remains well on track, on budget, as you've heard me say as well. So back half weighted, remain confident, we still expect '26 to be a stronger growth than 2025. Let me pause there, John.

That's clear. Second question for me is just given the disruptions we've seen in the Middle East, we've seen a kind of higher call for U.S. hydrocarbon exports. Could you just kind of remind us your asset position there, kind of what you've been seeing on the commercial side? Maybe if you can walk through Loop, Mount Airy and then, I guess, any incremental comments on the NGL dock under construction would be great.

Yes. I'll pass that to Shawn. He can give you some insights on the export dock as well.

John, sorry, this is Shawn. Thanks for the question. As we look at what's going on in the market dynamics right now and we look at our asset base, Mount Airy is a great example. We're located strategically right next to Garyville and based on some of the market things going on, I think MPC and others will continue to lean into that. So we anticipate that asset utilization will be increasing some. And then also, as you look -- you talked about Loop. MPLX has a share of Loop there. We've seen Venezuelan crude come in. And obviously, some imports and exports are increasing across that asset base there. And as Maryann mentioned on the, I'll say, the export dock and fractionator complex on the Gulf Coast. We're excited as we continue to on track for in-service date of '28 and '29. Again, we're excited that those -- our facilities, our assets are going to be full as we go in service date there.

Our next question comes from Burke Sansiviero with Wolfe Research.

So distribution coverage has been 1.3x over the past 2 quarters. Can you just provide a little bit more color on your confidence in growing the distribution by 12.5% for another 2 years and staying above the -- at or above the 1.3x threshold, seems to imply that cash flows also need to grow 12.5% from here?

Yes, certainly. So when we think about our 12.5% distribution growth both for this year 2026 and 2027, we've set financial metrics for that and one of which is, as you stated, that our coverage doesn't fall below 1.3. So that is our commitment. We look at that, obviously, on an annual basis, of course. But you're absolutely correct. Cash flows would be supportive of that, and we continue to see our ability to do that for '26 and '27.

And buybacks have been somewhat programmatic over the past year at $100 million quarter cadence. Can you just talk to why buybacks went down in Q1 to $50 million? And are you looking to retain more cash from here?

Certainly. So -- what I would say is there really no change in our overall capital allocation strategy. We continue to see opportunities to put capital to work and, therefore, have modified our share buyback program. I want to pass it to Chris because I know he's got a few things that he wants to share as well.

Yes. Thanks, Keith. And I'll say, as Maryann stated, again, no change to our capital allocation methodology or strategy. Distributions will continue to be that primary tool to return capital to unitholders with the unit repurchases really being that more flexible method of returning capital. But what I would also say is we continue to believe that MPLX units trade at a discount. We think this type of a program at this level reflects that belief.

[Operator Instructions] Our next question comes from Manav Gupta with UBS.

I have two questions. I'm going to ask them right upfront. So first, can we get an update on the Titan sour complex, what you're seeing in that area? Is the producer activity increasing with higher crude prices in that particular area? And second, I wanted to talk to you about -- a little bit about the local gas markets in Texas. There are more pipelines coming to Agua Dulce, including yours, but then you also have some pipelines like Traverse and BayRunner, which can move gas out of Agua Dulce and help with these opportunities where local prices are depressed. So could you talk about the local gas Texas markets and how MPLX can benefit from the dislocation in prices in various hubs?

In general, first, let me share with you sort of overall progress on Titan. First and foremost, as I mentioned, we were successful in the first quarter treating over 150 million cubic feet per day in the first quarter. As a matter of fact, March was actually -- we saw our absolute strongest performance in the month of March. And no change in our expectations for the completion of Titan II by the end of this year, 2026. So that we will have full run rate EBITDA as we outlined when we talked about the opportunity for North Wind. So we expect that expansion from 150 million to over 400 million cubic feet per day of sour gas treating capacity to be available and consistent. We're seeing a lot of interest from our producers, producer customers in that space, particularly as they are moving their production into that region. I'm going to first pass it to Greg to give you some incremental color on the customers. And then to respond to your question around all of the Texas opportunities as we see all that pipeline, I'm going to ask then Dave to answer your question on that. Thanks, Manav.

Manav, this is Greg. Just a little bit more color on the Titan system. We have been focused daily and weekly on integrated -- integrating that system, increasing reliability, bringing on more volume. We really continue to be excited about the number of rigs that are operating up in the -- this portion of Lea County in the Delaware Basin and the associated gas that comes with it. CO2, H2S sour gas that needs treating. So the demand is definitely there, as Maryann said. In terms of the projects, the scaling this is our other big focus, and that includes Titan II. We recently brought on a new sour gas treater on the north end of the system that we call It's a compressor station as well. That is operating well. And Titan and the multiple pipeline projects that are associated with increasing -- doubling our capacity at Titan. And our fourth well are all in in construction and on schedule for fourth quarter completion. .

So Manav, this is Dave. And maybe I'll touch on -- I'll build on a little bit what Greg talked about and touch on the gas markets and dig a little deep in our overall Permian wellhead-to-water nat gas strategy because I think I'll try to bring all the pieces of the puzzle together for you. So first of all, let me reaffirm a little bit that generally, MPLX is a fee-based business, and we're not taking on the commodity risks within the nat gas markets in the U.S. Gulf Coast. With that said, we think about our strategy, maybe think about 5 major components. So Greg touched on the first one. In-basin gathering process and treating. From their long-haul egress pipelines, and I'll talk about those in a minute. And then connectivity between markets. And then the next is connectivity into demand centers, specifically LNG, but also potentially data centers and power. And then finally is giving our shipper customers optionality and flexibility to all those markets. So -- when you think about the long-haul pipelines, you mentioned Agua Dulce. So from the basin in Agua Dulce, of course, we have Whistler already moving 2.5 Bcf a day, and we have Blackcomb coming in service in the third quarter of this year. And then when you think about the long hauls into the Katy market, of course, we have Matterhorn currently flowing 2.5 Bcf a day, similar to Whistler. And we have Iger coming online in 2028 in the second half of 2028. Those are those 4 main headers, both into Agua Dulce and Katy, which gives our customers that flexibility to those markets. But I think the other piece of the puzzle is Traverse, which is the bidirectional pipe between those two markets, which allows that flexibility. So that's that connectivity between markets. And then you think about you getting it to the end demand centers, specifically LNG and the high growth -- rapid growth in the LNG market. So of course, we got ADCC going into Corpus Christi, and we have the BayRunner wanted to go into next decade, specifically down in Brownsville, those last ones. So when we think about all that, that's really how we're trying to build out -- have been building on and continue to build out our nat gas strategy. With all that said, we also believe that there is the need for incremental egress pipelines out of the basin. So as we look forward, we think and believe that MPLX can continue to play a very active role in supporting those value chain solutions that -- and our strategies necessary to address all that incremental demand in those market opportunities. So hopefully, that gives you a little bit of color on how we're thinking about it.

All right. Thank you. Operator?

I am showing no additional questions. I will turn the call back to Kristina.

Thank you. Thank you for your interest in MPLX. Should you have more questions or would you like clarification on topics discussed this morning, please contact us. Our team will be available to take your calls. Thank you for joining us today.

Thank you for your participation. Participants, you may disconnect at this time.

Welcome to the MPLX Fourth Quarter 2025 Earnings Call. My name is Julie, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian. Kristina, you may begin.

Welcome to MPLX's Fourth Quarter 2025 Earnings Conference Call. The slides that accompany the call today can be found on our website at mplx.com under the Investor tab. Joining me on the call today are Maryann Mannen, President and CEO; Chris Hagedorn, CFO; and other members of the executive team. We invite you to read the safe harbor statements on Slide 2.

We will be making forward-looking statements today. Actual results may differ. Factors that could cause actual results to differ are included there as well as our filings with the SEC. As a reminder, in the fourth quarter of 2025, MPLX divested noncore gathering and processing assets, which had a $23 million year-over-year impact on our adjusted EBITDA within our natural gas and NGL Services segment. Additional details on the impact of this divestiture can be found on Page 11 in our earnings release.

With that, I will turn the call over to Maryann.

Thanks, Kristina. Good morning, and thank you for joining our call. 2025 was a year of disciplined investment and strong returns. It was our fourth consecutive year achieving a mid-single-digit 3-year adjusted EBITDA growth CAGR. Adjusted EBITDA reached just over $7 billion. The strength across our business gave us confidence to continue our history of returning meaningful capital to our unitholders. We increased our distribution by 12.5%, bringing total returns in 2025 to $4.4 billion. This decision reflects our commitment to return the value we create as we advance MPLX's growth strategy with our unitholders.

Over the past year, we took meaningful steps to position MPLX for the next phase of growth. We deployed $5.5 billion to our natural gas and NGL value chains, primarily focused on the fastest-growing region in the country. We optimized our portfolio through divestitures of noncore assets, ensuring our future capital deployment is aligned with the strongest return opportunities as we build the infrastructure that will fuel tomorrow's energy needs. Together, these investments and portfolio actions create a more resilient and competitive MPLX, one that we believe can continue delivering growth while maintaining our strong track record of returning capital to our unitholders.

Today, we announced our capital plan for 2026. We are planning to invest $2.4 billion as we execute on a robust pipeline of capital projects that support long-term structural growth. The long-term fundamentals for natural gas and NGL demand remain strong. In the U.S., natural gas demand is anticipated to grow over 15% through 2030, driven by the rapid expansion of LNG export capacity and rising power needs, particularly from data centers.

We are also seeing higher gas-to-oil ratios across key shale basins as aging wells produce more associated gas per barrel of oil. This trend is increasing supplies of NGL-rich gas and underscores the strategic importance of our infrastructure in the Permian. Globally, petrochemical demand for ethane and propane are driving increased NGL exports, further reinforcing the strength of the long-term outlook. 90% of our growth capital will be directed towards our natural gas and NGL services segment, where we see some of the most compelling opportunities in the midstream sector.

These projects are concentrated in the Permian and Marcellus, 2 of the most prolific and competitive basins in North America and are expected to generate mid-teens returns when they come into service in 2028 and beyond. These investments reflect our confidence in the long-term fundamentals of the energy market and in MPLX's ability to continue capturing value as these opportunities unfold. Execution of our Permian NGL wellhead-to-water strategy continues to advance. We are integrating the sour gas treating operations we acquired last year into our existing gathering and processing footprint in the Delaware Basin.

Titan treating complex construction continues and is progressing on time and on budget. And by the end of 2026, we expect to be treating more than 400 million cubic feet per day of sour gas. This sour gas complex enhances our treating and blending capabilities and provides an attractive solution for producers who are increasing activity in the low-cost sour gas window of the Delaware. Building on the downstream opportunities created by this platform, today, we announced Secretariat II, a new 300 million cubic feet per day processing plant. Expected to deliver mid-teens returns, the $320 million plant will be our eighth gas processing facility in the Delaware Basin and is expected online in the second half of 2028.

Once in service, our total processing capacity in the basin will reach approximately 1.7 billion cubic feet per day. Further downstream, the BANGL pipeline expansion remains on schedule with incremental capacity expected online in the fourth quarter of this year. Beyond BANGL, we are advancing construction of a 300,000 barrel per day of Gulf Coast fractionation capacity as well as our 400,000 barrel per day LPG export terminal JV. Engineering and construction continues. We have secured key construction permits, reflecting strong regulatory and stakeholder engagement. Site grading is near completion and is being executed with strong safety performance and responsible environmental stewardship.

The LPG export terminal expected online in 2028 will benefit from its advantaged proximity to open water, positioning us to serve growing global markets with greater efficiency. Elsewhere in the Permian, MPLX continues to invest in its integrated natural gas value chain. In November, MPLX, along with its JV partners, announced the expansion of the Eiger Express natural gas pipeline to 3.7 billion cubic feet per day. The expansion demonstrates the record demand for firm takeaway capacity we are seeing across the basin. Construction is also progressing on several long-haul JV pipeline systems.

These investments are underpinned by commitments from the basin's leading producers and will enhance shippers access to multiple premium markets along the Gulf Coast. In the Marcellus, our largest operating region, construction is advancing on the 300 million cubic feet per day Harmon Creek III gas processing and fractionation complex. Upon completion, expected in the third quarter of 2026, our Northeast processing capacity will reach 8.1 billion cubic feet per day and fractionation capacity of 800,000 barrels per day, positioning MPLX to serve growing Marcellus and Utica volumes.

MPLX is also expanding its Marcellus gathering system to meet producer needs through a $450 million project, which will add compression, support well connections and enhance MPLX's Majorsville gas processing complex. The project is expected to deliver mid-teens returns and enter service in the first half of 2028. Our capital deployment strategy positions MPLX for durable long-term growth. We are building the infrastructure system that will support rising North American future energy needs. From new treating and processing capacity to downstream fractionation and export, we plan to deliver on our commitment to create sustainable value for our unitholders.

Now let me turn the call over to Chris to discuss our operational and financial results for the quarter.

Thanks, Maryann. Slide 8 outlines the fourth quarter operational and financial performance highlights for our Crude Oil and Products and Logistics segment. Segment adjusted EBITDA increased $52 million compared to the fourth quarter of 2024. The increase was primarily driven by a $37 million benefit from a revised FERC tariff issued in November and higher rates, partially offset by higher planned project-related expenses. Pipeline volumes increased 1%, while terminal volumes decreased 2% year-over-year.

Moving to our Natural Gas and NGL Services segment on Slide 9. Segment adjusted EBITDA decreased $10 million compared to the fourth quarter of 2024 as the divestiture of noncore gathering and processing assets and lower NGL prices more than offset growth from recently acquired assets and higher volumes. After considering the $23 million impact of divesting noncore gathering and processing assets, we actually grew 2.1% year-over-year for the fourth quarter. Gathered volumes increased 2% year-over-year, primarily due to production growth in the Utica.

Processing volumes decreased 1% year-over-year as increased production in the Marcellus was more than offset by the sale of noncore assets. Processing volumes in the Utica have increased 4% year-over-year as producers continue to target this liquids-rich acreage. Marcellus processing utilization was 97% for the quarter, nearing capacity as Harmon Creek II is positioned to come online on a just-in-time basis later this year. Total fractionation volumes decreased 2% year-over-year as higher ethane recoveries in the Marcellus and Utica were more than offset by the sale of the Rockies assets. Within our natural gas and NGL business, recent freezing conditions across the country have impacted crude oil and natural gas production. We have seen minimal impact to our assets, but some producer customers have experienced frozen well pads and equipment, impacting volumes at a few of our facilities in the Permian.

Moving to our fourth quarter financial highlights on Slide 10. Adjusted EBITDA of $1.8 billion increased 2% from the prior year, while distributable cash flow of $1.4 billion decreased 4% over the same time frame due to interest expense associated with incremental debt used to finance recent acquisitions and growth capital. During the quarter, MPLX returned $1.2 billion to unitholders in distributions and unit repurchases. MPLX ended the quarter with a cash balance of $2.1 billion and plans to utilize this cash in alignment with our capital allocation framework. MPLX maintains a solid balance sheet. Looking forward, in March, MPLX has $1.5 billion of 1.75% senior notes maturing, which we intend to refinance. We expect leverage to fall over time as our acquisitions reach full run rate and our organic growth projects are placed into service.

Now let me hand it back to Maryann for some concluding thoughts.

Thanks, Chris. Through disciplined capital deployment, execution and optimization of our integrated value chains, we have achieved a 3-year adjusted EBITDA CAGR of 6.7%. This strong performance enabled us to increase our quarterly distribution by 12.5% for a consecutive year in 2025. We expect this level of distribution growth for 2 more years. MPLX enters 2026 in a position of strength.

Over the past year, we made deliberate investments and portfolio decisions that sharpened our focus and expanded our capabilities. We deployed capital into some of the fastest-growing regions in the country, divested noncore assets and built a more resilient competitive platform. In the second half of this year, we anticipate seeing contributions from the second Titan sour gas treatment plant, Harmon Creek III, the BANGL pipeline expansion, the Bay Runner pipeline and the Blackcomb pipeline.

We expect growth in 2026 to exceed 2025, driven by increased throughput on existing assets and new assets being placed into service. As these assets ramp to full capacity, we anticipate they will also support mid-single-digit EBITDA growth in 2027 as well. We remain confident these investments will enhance our cash flows and enable us to continue returning meaningful capital to our shareholders.

Now let me turn the call over to Kristina.

Thanks, Maryann. As we open the call for your questions, and as a courtesy to all participants, we ask that you limit yourself to one question and a follow-up. If time permits, we'll reprompt for additional questions. Operator, please open the line for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from John Mackay with Goldman Sachs.

Maryann, I wanted to pull together a couple of points you mentioned. Can you talk a little bit more about your confidence in that mid-teens return target for the project backlog, particularly in the context of maybe lower growth in '25 versus the mid-single-digit overall target going forward? And maybe particularly anything you can share around contract protections, et cetera?

Yes. John, thank you. And certainly, when we think about 2026, and frankly, when we think about any capital investment that we put to work, we continue to use our lens of strict capital discipline and ensure that we are delivering mid-teens returns and that those projects are also supportive of our mid-single-digit growth. As I mentioned from a period or 2 ago, as we look at the growth going forward, it is unlikely that we're going to be able to be completely linear. We're putting capital to work that has EBITDA contribution that's coming online in later years. And then we're also adding in our organic M&A opportunities, projects that come online in the short term in order to be able to deliver that as well.

Let me give you a couple of examples of that. You think about BANGL, the incremental ownership comes online in 2026, incremental EBITDA. I mentioned Secretariat I ramping up through 2026 that will add incremental EBITDA again this year. We've got Bay Runner, as I mentioned, in Blackcomb in service in the fourth quarter contributing to that also. Moving on to the Marcellus, you've got Harmon Creek III also that will be online in the back half of the year. These are some significant projects, again, through that lens, mid-teens returns to support mid-single digits. So that gives us the confidence, as we say that, one, year-on-year, '25 to '26, we should see growth above what we saw in '24 and '25. And we hope that you see that the 2026 capital outlook really signals compelling investment opportunities for us. We think the backdrop, particularly when you look at demand pool, NGL nat gas is extremely supportive. And then frankly, when we look at 2026 exit rate for our sour gas project, we remain confident in our ability to deliver that EBITDA into 2027. And as I mentioned, Gulf Coast project on track for '28 and beyond.

I appreciate all that detail. Maybe drilling in a little bit more. It sounds like you've had some early success on commercializing some of the North Wind kind of synergy projects with Secretariat II. Can you just frame up for us kind of where that process stands? Is there more you can do on capturing some of those volumes coming off that system?

Yes. Certainly, John. Thank you for the question. As you know, when we talked about the acquisition of Northwind or as we call it our Delaware Basin sour gas facility, we felt like it was a critical platform for future growth, particularly when you look at what we consider to be some of the best rock in the Permian and our ability to help producers with treating and processing that. We mentioned at that time that we thought when you looked at the processing contracts now, those had a much shorter duration versus the long-term average 13-year on the treating side.

But on the processing side, we said this could potentially be accelerating our growth as we were able to bring new assets online to address those contract roll-off on the processing side. But I would also tell you that Secretariat II will also help us support our legacy volumes as well. So not only is it supportive of growth beyond the Northwinds platform, but also for our legacy growth. I'm going to ask Greg to give you incremental color on the legacy side.

John, yes, we're really excited about -- we continue to be very excited about the sour gas system that we acquired. I mentioned before that it wraps around our existing legacy system as if we had we have planned and built it. Part of the Titan II expansion, which we're on track, on time and budget to have complete late in the year, allows us to meet our expectations for run rate in 2027, as Maryann mentioned, but it also provides an opportunity to connect this system into our legacy system.

So along with the Titan II project and the compression expansions and the pipelines that we're building to support that uptick in volume, we're also building connecting lines, one on the north end, one from the Titan facility over actually to Secretariat to our [indiscernible] complex and then a middle line. So we'll be able to start offloading when those lines are complete and as Titan capacity ramps up. But we're also -- we see very robust growth continuing in the legacy portion of our system. Some of it on the edge of the sour, some in the suite, but still really robust activity from the drillers. So we upsized Secretariat II. It will be our first 300 million cubic feet per day plant and partly to account for the additional growth we have from both systems.

Our next question comes from Manav Gupta with UBS.

Maryann, I just wanted to ask you, there is a little bit of bearish sentiment on LPG exports generally and fears of overcapacity. But in the last few days, you have had this India-U.S. deal and India is looking to buy a lot more energy from U.S. And I think LPG exports could be a new growth opportunity in that direction. So if you could -- if you have had time and if you could talk a little bit about the new opportunities that open for LPG exports with this India-U.S. trade deal.

Thank you. You're absolutely right. One of the reasons why we continue to look at this opportunity, putting capital to work, we see strong demand for NGL and nat gas, and there is a pull there, obviously, from the growth anticipated from LNG -- and as you mentioned, I think the announcement or the conversations yesterday really are further supportive of the positions that we have and have had really for the last several quarters as we think about some of the capital that we've put to work.

We think market dynamics for global LPG demand remain very strong. There's no doubt about that. And again, as I mentioned, I think the announcement or the conversation yesterday, hard to predict, right, early days there, but it is certainly, I think, supportive. And then when we look at our assets, we're pretty convinced about their capabilities. When they come online, '28, '29, we believe will be full as we have shared with you before. We think we've got a good position when we look at LPG export given our dock, given the partnership that we have and given the potential there for the long term. So we feel very good about that, obviously, as we continue to put capital to work in that space.

Perfect. My quick follow-up here is, look, when we look at organic growth capital, obviously, I think you were at $2.4 billion for '26, you were close to $2 billion last year, but then you did deploy almost $3 billion, $3.5 billion of growth capital through M&A. And I'm trying to understand, would -- if the right opportunities present themselves, would you be open to still bolt-on M&A in 2026? And the question I'm trying to ask is, at the start of the call, you said dividend distribution growth can be 12% for the next couple of years. I'm trying to understand with some good M&A, can that 2 years become 3 years or more, if you could help us understand that?

Yes, certainly, Manav, and thank you for the question. As you know, and similar, as we set out this time last year, we put forth our capital plan, and that capital plan is very specific to the organic projects that we have ongoing. You think about our Gulf Coast fracking terminal, the capital on the Delaware Basin, sour gas. We've got the Marcellus expansion that I mentioned, Secretariat. But we continue to look for M&A opportunities. We look through them through the lens of strict capital discipline. We ensure that they meet our mid-teens returns and also that they are strategically aligned with, one, our nat gas and NGL wellhead-to-water strategy, they fit that strategy.

So when I talk about the 12.5% being for the next 2 years, that meets all of the financial criteria that we've shared. That doesn't mean we don't have an intention of increasing the distribution beyond that. And as you say, it will depend on what that growth is. So as we find those M&A opportunities, we have a balance sheet that's quite strong, we believe, and we would absolutely consider incremental opportunities. And frankly, as you've seen us do in the past, some that are easiest for us and fairly immediately accretive would be our JVs. When we look at take BANGL as an example, there are opportunities that would exist for us to continue to build out our ownership with the JVs that we currently have as a part of our portfolio. I hope that helps.

Our next question comes from Theresa Chen with Barclays.

Maryann, maybe taking the opposite side of the M&A question. Looking at your portfolio optimization actions, which have been fairly consistent through the years, anything would you say you're at in terms of pruning assets that are less strategic across your portfolio to free up capital to pursue additional organic and tuck-in M&A growth?

Theresa, thanks for the question. As you know, we continue to evaluate all of our assets. We say we want to ensure that we have the portfolio for today and the portfolio for the future. All of those basins today are cash flow positive, but we will always look through short term and long term and see whether or not there are owners of those assets, similar as we think about what we just recently did with the Rockies that have a different view on that growth profile so that we can continue to invest in those opportunities in the Marcellus and in the Permian where we believe the most opportunity exists for us. So we'll continue to do that, Theresa, absolutely.

Understood. And given recent consolidation by some of the upstream community, how do these trends affect your growth outlook for your supply push assets and recontracting strategy over time?

So I would tell you, as we look at some of the recent announcements, certainly, those customers have been and will continue to be an important part of our portfolio, specifically when we look at recontracting, if you think about the one that was just announced yesterday, -- and again, it's an early read, but when we look through that in terms of the way that the transaction has been announced and it is structured, we don't see any immediate risk with contract renegotiation, et cetera, from a legal perspective. Absolutely no.

Our next question comes from Keith Stanley with Wolfe Research.

Sorry to beat a dead horse on the growth rate, but I wanted to clarify on 2026. You said it's faster growth than 2025. But would you say it's an above-average growth year in '26 or just faster than '25? And relatedly, is that 2026 growth expectation inclusive of the headwind from the Rockies asset sale?

So thank you for the question, Keith. Yes, it is inclusive of the headwind coming from the Rocky sale, absolutely. And my comment, '24 to '25 growth is stronger than '24 to '25. But I'm not suggesting that it is completely outsized there. It is larger growth. Remember, we are starting from a $7 billion position. So growing that mid-single digit is a range of $450 million to $500 million depending on where you are in your mid-single-digit range. So it is '24 -- excuse me, '25 to '26 stronger than '24 to '25. I hope that helps, Keith.

It does. Second question, I wanted to ask on the FERC index change for the next 5-year period. So that's now a PPI minus 0.6%, I think. Should we think of that as a headwind for your outlook for the liquids business? Or would you say that new inflation adjustment level was expected and already baked into your plans and outlook?

Keith, this is Shawn. Thanks for the question. Although the FERC adder is negative, we did anticipate this, and this is in our plan. So we don't expect it to impact our plan to grow our EBITDA mid-single digits. Let me give additional context also. If you just look at the COPAL segment that we are -- about 33% of the COPAL segment is tied to the FERC. And across all of MPLX, it's about 20%. So it gives you some context of how much that announcement by FERC and the effect with MPLX.

Our next question comes from Elvira Scotto with RBC Capital Markets.

I was wondering if you could provide some additional commentary around the new growth projects, especially in the Marcellus, what you're hearing from producer customers? And then how do you expect Harmon Creek II to ramp?

Yes. So when we talk about Marcellus, first of all, I mentioned that we've got capital this year, and that project will come in service in a few years, right? It's not an immediate contribution in 2026. Mid-teens returns, clearly, producer customers, if you think about the way that we stay connected to our producer customers and just in time, a pretty important project for the long term. It's a compressor station, 30 miles of pipeline, well connections, debottlenecking. And so important as we think about providing that egress for our producer customers. I'm going to give the -- I'll pass it to Greg and have Greg tell you a little bit more about that project.

Yes. We're really excited about the Harmon Creek III project and also the -- we're building a second full-size de-ethanizer as part of that project and some compression and pipe to help feed that. It's in our gathering system in Washington County, PA. If you look at the entire Marcellus, we were at 97% utilization this last quarter. So we're -- and that's a high utilization number, but you put it in context, that's close to 7 billion cubic feet a day that's going through that system.

So it's our largest system. It's nearly full. So it's a great story. When we need to expand and a producer wants to expand, right now, it typically means a new plant or at least major piping and compression to help try to fill whatever existing capacity is there. So we expect Harmon Creek III, which is tied into that system and has great residue takeaway, NGL takeaway capability and the demand that's there for that, to take up that additional capacity will be ramped up and filled on our normal time frame.

Okay. And then just wanted to switch over to capital allocation. Can you maybe talk a little bit about any comments around leverage and distribution coverage, kind of expectations in '26 and '27? And then just as you've become a much bigger company with a much bigger EBITDA base and you have a lot of kind of organic growth opportunity. How should we think about sort of CapEx moving forward?

Thank you. Appreciate that question. So let me start with the capital allocation. What I would tell you is when we think about capital allocation, our philosophy remains unchanged. So you think about the way we've lined that out historically, it has been, first and foremost, maintenance capital, then our distribution growth then our growth capital and then our unit buybacks with that last one always being the one that we would toggle. As we look forward to '26 and '27, even as we talked about, Maryann mentioned the 12.5% distributions over the couple of years, we model that out.

When we think about coverage, we don't see ourselves going on an annual basis below that comfort level of 1.3x. We're obviously also very much watching our leverage and managing to a leverage number that I think we've historically said we're comfortable with that 4.0x. And as we look forward with our capital plans as we sit today, we would not go above that 4x.

Great. And then just on the kind of CapEx how should we think about CapEx kind of going forward, the organic?

Yes. It's a great question. And as we think about CapEx, we think about our growth, what we really have to -- as you said, the EBITDA number keeps getting larger. So as that number grows, the number of organic projects and/or bolt-on M&A has to grow with that EBITDA number. If you continue to target a mid-teens return, right, we can do that math. We know that over time, that number has to grow. So we're actively looking at that on a 5-year really basis and beyond. And we're modeling that EBITDA in as we would see these projects come online.

At this time, I'm showing no further questions.

All right. Thank you for your interest in MPLX today. Should you have more questions or would you like clarifications on topics discussed this morning, please contact us. Our team will be available to take your calls. Thank you for joining us today.

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Welcome to the MPLX Third Quarter 2025 Earnings Call. My name is Shirley, and I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian. Kristina, you may begin.

Thank you, Shirley. Welcome to MPLX's Third Quarter 2025 Earnings Conference Call. The slides that accompany this call can be found on our website at mplx.com under the Investor tab. Joining me on the call today are Maryann Mannen, President and CEO; [indiscernible] Hagedorn, CFO; and other members of the executive team. We invite you to read the safe harbor statements on Slide 2. We will be making forward-looking statements today. Actual results may differ.

Factors that could cause actual results to differ are included there as well as our filings with the SEC. With that, I'll turn the call over to Maryann.

Thanks, Kristina. Good morning, and thank you for joining our call. I'd like to take a moment to recognize Mike Hennigan. At the end of the year, Mike will be stepping down as our Executive Chairman. Mike's guidance has been tremendously valuable to our Board, to me and our entire leadership team. We thank him for his service as well as all of his contributions. He will be missed.

Delivering on our commitment to return capital, MPLX increased its quarterly distribution by 12.5% for the second consecutive year. The increase is supported by our multiyear track record of mid-single-digit growth and reflects conviction in our growth outlook from recent capital deployment. Our growing portfolio is expected to support this level of annual distribution increases over the next couple of years.

In the third quarter, MPLX generated adjusted EBITDA of $1.8 billion. Strong performance through the first 9 months has contributed to year-to-date adjusted EBITDA of $5.2 billion, reflecting growth of 4% over the same time frame in the prior year. Distributable cash flows of $1.5 billion, which supported the return of $1.1 billion to unitholders. We are committed to returning capital to unitholders, primarily through a secure and growing distribution, but also through unit repurchases as we believe our equity remains undervalued.

MPLX is optimizing the competitive position of its portfolio as we pursue mid-single-digit adjusted EBITDA growth anchored in the Marcellus and Permian Basins, advancing our strategic commitments. During the third quarter, MPLX closed on 2 strategic acquisitions. First, the remaining 55% interest in the BANGL NGL pipeline system. Full ownership of BANGL and its expansion opportunities enhance our Permian platform as we connect growing NGL production from the wellhead to MPLX's Gulf Coast fractionation facilities and export terminal joint venture currently under construction.

We are progressing the expansion of BANGL from 250,000 to 300,000 barrels per day, which we expect to enter service in the second half of 2026. Second, MPLX closed on the acquisition of a Delaware Basin sour gas treating business, integrating our newly acquired sour gas treating assets with MPLX operations is ongoing. Additionally, we are completing construction of the second amine treating plant at the Titan complex. This will increase sour gas treating capacity from 150 to over 400 million cubic feet per day expected by the end of 2026, driving the returns we expect from the acquisition and expansion.

The sour gas treating capabilities will allow us to capitalize on additional growth opportunities. These sour gas treating assets are adjacent and complementary to our existing natural gas system in the Delaware Basin. They expand MPLX's treating and blending operations, attractive to our current and new customers who are increasing crude drilling activity in the lower-cost sour gas window on the eastern edge of the Northern Delaware Basin. And the asset increase access to natural gas and NGL volumes.

We are advancing our strategic growth objectives in the Permian. Secretariat our seventh processing plant is expected to be online at the end of 2025, bringing total regional capacity to 1.4 billion cubic feet per day and we fully own the BANGL Pipeline system integral to MPLX's Permian NGL chain, which is expected to add incremental EBITDA in 2026. Construction is progressing on schedule and on budget for the first Gulf Coast fractionation facility and LPG export terminal. The location of our LPG dock is advantaged as it will allow vessels to avoid congestion and reduce fuel consumption, lowering cost for shippers.

MPLX will not have direct commodity price exposure as MPC will purchase the LPG production from the fracs and market globally through its marketing business across the new export terminal, demonstrating the strength of our strategic relationship with MPC. The first frac export terminal and purity pipeline are expected to enter service in 2028 with full run rate in late 2029. Within natural gas, MPLX and its partners announced they will construct the Iger Express pipeline having secured firm transportation agreements with investment grade shippers.

Upon completion, expected in mid-2028 the pipeline will transport natural gas from the Permian Basin to the Katy area of Texas. IGR will have connectivity to the Traverse natural gas pipeline which connects supply between Agua Dulce and the Houston area and will provide shippers optionality and access to multiple premium markets on the Gulf Coast, driven by demand pool for LNG exports. The continued build-out of our Permian to Gulf Coast natural gas system enhances that value chain with additional growth opportunities.

Favorable market outlook supports our operations in the Marcellus, Utica and Permian basins, MPLX is positioned for long-term natural gas volume growth in these key operating regions, and we expand our integrated value chains and execute our wellhead-to-water strategy. This year, over 90% of MPLX's total investments are being allocated to opportunities within our natural gas and NGL Services segment. The progress and execution of our strategic commitments give us conviction in the sustainability of our mid-single-digit adjusted EBITDA growth outlook for 2025 and beyond.

Our approach to growth is structured to deliver mid-teens returns on our investments and mid-single-digit adjusted EBITDA growth. We do this by constructing processing facilities on a just-in-time basis, maximizing the utilization of existing assets, optimizing value chains, and strengthening our strategic partnership with MPC. In the Marcellus, our largest operating region, construction of our Harmon Creek processing plant and fractionation facility aligns with producer drilling plans. This new complex will feature a 300 million cubic feet per day gas processing plant and a 40,000 barrel per day de-ethanizer supported by producer commitments.

In the second half of 2026, we anticipate our gas processing capacity in the Northeast will reach 8.1 billion cubic feet per day and fractionation capacity will reach 800,000 barrels per day positioning MPLX to handle growing production from the Utica and Marcellus. As demand for natural gas-powered electricity rises, MPLX is well positioned to support the development plans of its producer customers. In our crude oil and product logistics segment, we are focused on expanding gathering infrastructure, enhancing butane blending at terminals, growing volumes organically and pursuing high-return projects to maximize asset utilization.

With a strong pipeline of organic opportunities, we are well positioned to generate resilient cash flows that underpins our commitment to deliver long-term value and return to capital to unitholders. Now let me turn the call over to Kris to discuss our operational and financial results for the quarter.

Thanks, Maryann. Slide 12 outlines the third quarter operational and financial performance highlights for our Crude Oil & Products Logistics segment. Segment adjusted EBITDA increased $43 million when compared to the third quarter of 2024. The increase was driven by higher rates, partially offset by higher operating expenses. Pipeline volumes were flat, while terminal volumes were down 3% year-over-year. Moving to our natural gas and NGL Services segment on Slide 13. Segment adjusted EBITDA increased $9 million compared to the third quarter of 2024.

As contributions from recently acquired assets and higher volumes were partially offset by higher operating expenses. Gathered volumes increased 3% year-over-year, primarily due to production growth in the Utica. Processing volumes increased 3% year-over-year, primarily from increased production in the Utica and Marcellus. Permian processing volumes increased 9% compared to the second quarter of this year. Processing volumes in the Utica have increased 24% year-over-year, showing the value of the liquids-rich acreage. Marcellus processing utilization was 95% for the quarter, reflecting robust producer activity in the region.

Total fractionation volumes increased 7% year-over-year, primarily due to higher ethane recoveries in the Marcellus and Utica. Moving to our third quarter financial highlights on Slide 14. Adjusted EBITDA of $1.8 billion increased 3% from the prior year, while distributable cash flow of $1.5 billion increased 2% over the same time frame. MPLX returned nearly $1 billion to unitholders and distributions and $100 million in unit repurchases. During the quarter, MPLX issued $4.5 billion in senior notes the proceeds of which were primarily used to fund our acquisition of the Delaware Basin sour gas treating business and to increase cash from the Bango acquisition and associated debt repayment.

MPLX ended the quarter with a cash balance of $1.8 billion and plans to utilize this cash in alignment with our capital allocation framework. MPLX maintains a solid balance sheet with leverage below our comfort level of 4x. Now let me hand it back to Maryann for some concluding thoughts.

Thanks, Kris. Our distribution increase of 12.5% announced last week marked the fourth consecutive year of double-digit increases resulting in annualized base distribution growth of greater than 50% over the past 4 years. Through prudent capital allocation, cost control and operational optimization, MPLX has achieved a 7% compound annual growth rate in both adjusted EBITDA and distributable cash flow over the past 4 years. Year-to-date, we've returned $3.2 billion to unitholders. As we've stated before, adjusted EBITDA growth at MPLX will not be linear.

We anticipate growth in 2026 and will exceed that of 2025, supported by throughput growth on existing assets and new assets being placed in service. Our growing portfolio is well positioned to sustain this level of annual distribution increases over the next couple of years, and we do not expect MPLX's coverage ratio to fall below 1.3x.

In summary, MPLX is well positioned to capitalize on opportunities that fit our strategic road map as we execute our plan, targeting mid-single-digit adjusted EBITDA growth. As a strategic asset for Marathon and with the distribution increase, MPLX is expected to provide $2.8 billion annually to MPC through its growing distribution. Our unwavering focus on safety and operational excellence strategic growth opportunities and strong financial flexibility enable us to consistently drive cash flow growth. This, in turn, supports our commitment to delivering peer-leading capital returns to unitholders. Now let me turn the call over to Kristina.

Thanks, Maryann. As we open the call for your questions, as the courtesy to all participants, we ask that you limit yourself to a question and a follow-up. If time permits, we will reprompt for additional questions. Sheila, we're ready for questions, please. .

[Operator Instructions] Our first question comes from John Mackay with Goldman Sachs.

I wanted to start on the EBITDA growth outlook. You guys have done a bunch of projects, M&A this year. Maryann, I was wondering if you could kind of walk us through how you're thinking about the go-forward growth outlook now for EBITDA, both kind of level and duration relative to how you were framing up kind of the similar target of mid-single-digit EBITDA growth at the beginning of the year before we had some of these announcements. .

Yes. Thanks, John. And thanks for your question. So as I mentioned in my prepared remarks, when we look at our growth rate, '24 to '25, and then we look at it also from '25 to '26, we believe '25 to '26 will actually deliver stronger growth than we did '24 to '25. As you know, we've also been talking about our EBITDA growth over a 3-year period. And when we look at that, it's been roughly 7% for the last few years, we see the ability to continue that as we look into 2026 for right now for those acquisitions and other projects that we put into place.

So maybe let me take a minute and talk about how we see that unfolding to address your question of how did we think about it in the beginning of the year, certainly versus how we're looking at it now. When we look at 2026, as an example, a couple of things really begin to come online and increase that growth that I was referring to. So as you know, we mentioned BANGL the incremental 55% ownership will now be additive to 2026 EBITDA targets.

As I mentioned, secretariat will come online at the end of this year, and that ramp up into 2026 will again deliver incremental EBITDA throughout 2026. We'll also have the full rate of Preakness 2 that come that came online in the third quarter of '24. And so we'll have full ramp up as we head into 2026. And then the sour gas investment that we made, as you know, will reach full run rate by the end of 2026 has tightened the next phase of the Titan treatment plant comes online. So we'll see that incremental EBITDA coming from Titan as well.

And then there's a few other projects, as you know. And then heading into '27. We obviously have full rate for Titan consistent with the way that we've shared with you as we talked about the EBITDA potential on that transaction. And then also Ag pipeline, as an example, another project that we just announced that will bring EBITDA into 2027. I'll take you actually to '28 and '29, just for a moment. but in '28, we'll have the first track in the LPG export com online. -- and then obviously heading into full run rate as the second one comes online in '29 as well. So those projects either organic or those acquisitions, I think, supports our ability to continue to grow that mid-single-digit growth. Let me pause there, John and see if I've answered your question.

No. That was great. I appreciate the color. Maybe just as a second question from my side. I would love to hear a little bit more about the power LOI, maybe just steps to converting that, how we think about the opportunity set for you, returns, et cetera? .

Yes. Thank you for that. As you saw, we issued that -- excuse me, a press release this morning and appreciated it is an LOI in this early stage. One, we think the opportunity with [indiscernible] is is important -- critically important for us as we evaluate the opportunity set around data centers and AI. We think for MPC, this obviously creates in-basin demand. And then ultimately, at what we would consider to be a very low cost or no cost transaction here in this early evaluation. -- we will we will provide gas. And then in return, we receive lower cost, reliable power, which, in fact, will get passed on to our producer customers. But time-wise, this is certainly not a 2026 project. It will be beyond 2026, John.

Our next question comes from Manav Gupta with UBS. .

I would like to start by saying, I'm a big fan of Mike Hennigan, but he has left the company in very good hands. So -- congratulations Maryann. My first question to you is can you elaborate a little more on the Permian sour gas opportunity. And it's my understanding you do not need to permit more AGI wells to run this asset at full capacity because that's where the gating factor is? If you could talk a little bit about those things.

Thank you for your question, and we agree with you as it relates to Mike Hennigan. So on the Permian sour gas opportunity, as we shared, we've got about $0.5 billion of incremental capital that gets us to all of the investment economics that we shared. That includes getting the treatment -- the amine treating Titan facility as we call it, from 150 to 400 and the next AGI well. There is no other incremental asset gas injection well necessary to meet the economics on the project as we have outlined for you so far.

Perfect. My quick follow-up here is, as you evaluate all these data center opportunities, would there be more letter of intent or similar nature? And how you're seeing that pipeline? And then the bigger question is, some of your peers have said this opportunity set is so big that we are even open to generating and selling electricity using our natural gas. Is that something which MPLX could be open to if the right opportunity arises or you're more comfortable being the supplier of natural gas but not the generator of electricity, if you could talk about that? .

Yes, of course. Thanks for the question. As you know, when we look at the Northeast, we are handling, touching 10% of U.S. natural gas consumption every day. So our ability to continue to evaluate where in this opportunity set that we can best support our producer customers is a place that we are spending time evaluating, et cetera. Again, this mirror is the first step for us as we continue to evaluate those opportunities. I'm going to pass it to Greg who's been spending quite a bit of time looking at how and where MPLX can continue to pursue opportunities.

Manav, it's a great question. The first, obviously, as Maryann said, being a large player in the midstream business and touching a lot of gas, we aggregate gas at our processing plants. -- similar to interstate pipelines and some of the other projects you've seen. So we certainly have the ability to co-locate similar to the [indiscernible] project where we have a co-located facility and we can sell gas and buy power and increase reliability.

In terms of generating the power, the solar turbines and the Caterpillar reciprocating engines that that constitute most of the prime movers for generation behind the meter are assets that we deploy by the hundreds across our system. So we know how to install, operate and maintain these units running all of our gas compression. And so we have that capability. On the refining side of Marathon, we actually self-generate power at some of the refineries. So we have the capability, but it's a separate business case in terms of moving from providing gas and processing to move into the power generation business. So that's something that we'll keep all options open and continue to look at, talk to a lot of people and see where that goes, if anywhere.

Your next question comes from Theresa Chen with Barclays.

Going back to the Titan complex and the early days of integration after the recent close. As you continue your investment here in the build out, has there been any shift in commercial activity with your customers? Any incremental interest in your services now that you have the set of assets within your portfolio? .

Teresa, thanks for the question. I would tell you, integration with our sour gas acquisition, which we refer to as North Wind has gone very well as we exited the quarter at roughly processing at 150. You may have also heard and we'll echo some of the comments that those producer customers who we are working for in the region have commented on. I think they're pleased with the fact that MPLX now owns this asset. We're working diligently. They were customers of ours in that basin prior and this adds more opportunity for us to continue to work closely with those key customers.

One of the other things that we talked about when we were together the last time was the potential for processing. Some of our contracts are about 2 to 3 years, they're third party. And as we look at the ability to accelerate growth in that region, being able to take on incremental processing would be a place that we would look to grow beyond that integration. The other thing that I would mention is we continue to look at the project, and as I shared with John earlier, passing the look at how EBITDA will grow, we expect to be complete so that by the end of 2026 since we head into EBITDA generation. Those projects will be completed and we'll be able to see the full benefit supporting our customers in the basin.

I look to Greg to see if there's anything else that he wants to add because he's been overseeing the strength of that integration.

Thanks, Maryann. We've been spending most of the time towards the last few weeks of the quarter and then in the early first quarter, integrating the assets and working with producers to ramp up volume. We've had we're integrating people into our existing team in West Texas, and that's going very well, and we're also integrating systems, accounting systems, operating systems and trying to integrate the systems together. And we've got great feedback from our customers. We're meeting with our customers. I think they're excited about our ownership and operation of the system and moving to the next level as we continue to deploy the assets.

TITAN 1 train in the commissioning process late in the quarter and into the prior month and the third train of TITAN 1 and then TITAN 2 Civil and [indiscernible] underway for that plant to come into service latter part of '26.

And then related to the LOI with Mira, Maryann, going back to your comments about how low or no cost is going to be. Can you just frame that up in terms of what would be the nature of any potential CapEx related to this? And is there not so much of like a CapEx or economic moat what position you to win this agreement? And what would position MPLX in your regions of service given the competition out there to win incremental agreements. And with this transaction, specifically, what are the next steps? .

Yes. Thanks, Teresa. Look, I think one of the benefits that we see from this transaction is the potential for in-basin demand, right? The growth on that in-basin demand. So essentially, the way that this LOI will continue to be structured is we will provide gas, I'd like to say, at the tail pipe of our plants. And then in return, so to speak, right, we will have the ability to have lower cost, more reliable power to provide to our producer customers. So again, when I say low or no cost, there really isn't anything that we need to do in order to facilitate that transaction.

In terms of the opportunities there, we're continuing to evaluate how that might go forward. But as we stand right now, this LOI, we think, has the potential to increase in-basin demand.

Our next question comes from Burke [indiscernible] with Wolfe Research.

Just looking at Slide 9. Can you please walk through some of your assumptions for in-basin demand growth and incremental takeaway capacity to underwrite the 10% Marcellus and Utica gas growth through 2030, mainly curious if you expect new greenfield pipelines to be built out of Appalachia.

This is Greg. I'll speak to that. The -- we continue to grow in the Marcellus and the Utica, primarily the Marcellus through incremental plant construction. As you see our Harmon Creek 3 plant in Washington County, PA is in construction and supported by customer contracts. We also have seen growth over the last 12 to 18 months in the Utica as we fill existing capacity in that system that was built years ago and as rigs moved away capacity freed up, but we're filling that capacity. We're at over 70% utilization in the Utica now at 95%, a new high in Marcellus. In spite of being our largest area in processing over 7 Bcf a day of gas of rich gas and liquids that come with that.

So we are -- our customers -- producer customers who own the residue gas back of our plants have commitments and are finding the capacity to exit the basin. There's also in-basin demand growth, both for power generation, both coal to gas power plant, coal to gas switching at power existing plants and then new plants as well as behind the meter, whether data center or other power generation. So I think there's in-basin demand growth. Obviously, MVP coming online was a big adder to takeaway capacity, and we continue to see increases in capacity announced on that system, particularly as the downstream pipeline system is debottlenecked. So we feel that our producers with the positions they have, both in firm capacity and capacity that opens up that maybe other producers don't use have growth, the ability to continue to grow even in the Marcellus where the volumes are high in utilization side.

[Audio Gap]

[Audio Gap] tried to lay out how we see that EBITDA coming to fruition. But certainly, when we look at organic opportunities, we have those that fit our strategic lens, et cetera, we're executing on those gave you a few examples. But we also see the opportunity, again, assuming that those M&A opportunities would meet our strategic rationale provide us that mid-single-digit growth and give us the mid-teens returns, we do see opportunities for incremental M&A to continue to build out mid-single-digit growth. I hope that was your question, Jeremy.

So it sounds like organic alone wouldn't get to mid-single digit, there would need to be acquisitions to get there over a multiyear period. .

Yes. I think that's fair. When you look at the size of our EBITDA, look at if I can rough math for you, just a $7 billion EBITDA, we're approaching $0.5 billion worth of growth. We've shared with you the opportunity set in nat gas and NGL and we'll continue to focus our resources in the Permian. We will also concentrate on the base business. We never lose focus on the base business and including JVs and opportunities there as well. But given the size of that EBITDA growth, likely that we will see inorganic opportunities as well.

Jeremy, this is Chris. I might just add to that as well, though. One thing I do want to note is you've heard about all of these acquisitions we've recently done -- this also provides additional growth opportunities of new organic projects for optimization and growth. So that backlog of what I would call capital projects is going to continue to grow. So we have backlog looking at '26, '27 as we sit today, '28. As Greg and Sean continue to see these assets come online, they're also going to identify more opportunities for more organic projects as we progress.

That's helpful. And if I could get one last one in. Just as far as the distribution growth policy, how should we think about that over time post the 2%, 12.5% raises recently here? .

Yes. Thanks, Jeremy. So as I mentioned, we look at a couple of years and see a path to 12.5% distribution growth for the next couple of years. That's how we're seeing it today. And beyond that, we'll continue to evaluate. But for the next couple of years, in addition to '24 and '25, that's how we see 12.5% distribution growth.

Our final question comes from Michael Blum with Wells Fargo.

Just wanted to go back to a prior comment made about evaluating potentially bringing power to a data center project since you do operate a lot of -- you have a lot of experience operating those anyway. Is that something that you're actively evaluating and then going with potential customers or just more something that's sort of a longer-term potential item?

Yes. We're not -- no intent to mention that we're actively evaluating it really is that we have capability and optionality if it made sense in the future.

Okay. Perfect. And then I just wanted to ask like high level, you could refresh us a little bit I think there's a view out there that crude oil prices are going to be lower for some period of time here. So can you just discuss how that could impact your Logistics segment either positively or negatively? .

This is Shawn. Just on the crude oil and product logistics side of the business, if you look at our volumes continue to be strong. really in all areas. And really, that is anchored and really part of our partnership with Marathon Petroleum. And that's where the 2 together and that partnership continues to give us a really strong foundation. But I think as we look out, a strong -- we continue to see strong demand or strong throughput.

Yes. Michael, this is Kris. You'll remember that on the crude oil and projects logistics side of the business, those contracts with Marathon have significant minimum volume commitments and they're also capacity type arrangements. So if you go back all the way to kind of the COVID year, you'll remember, they didn't really see that big of a dip in what would be probably the most extreme hopefully, we ever see when it comes to EBITDA from that segment. So that segment is very well protected.

I would add -- this is Greg. I would add that from a producer standpoint, we're still seeing strong demand for -- whether it be gas, NGLs or crude oil, we're not seeing changes in plans in terms of producer activity.

All right. Operator, do we have any other questions today?

At this time, I'm showing no further questions. Great. With that, should you have more questions or would you like clarification on the topics discussed this morning, please feel free to reach out. members of our Investor Relations team will be available to make -- take your calls. Thank you so much for joining us today.

Thank you. That does conclude today's conference. We thank you for your participation. At this time, you may disconnect your lines.

Welcome to the MPLX Second Quarter 2025 Earnings Call. My name is Ted, and I'll be your operator for today's call. [Operator Instructions]. Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian. Kristina, you may begin.

Welcome to MPLX's Second Quarter 2025 Earnings Conference Call. The slides that accompany this call can be found on our website at mplx.com under the Investors tab. Joining me on the call today are Maryann Mannen, President and CEO; Chris Hagedorn, CFO; and other members of the executive team. We invite you to read the safe harbor statements on Slide 2.

We will be making forward-looking statements today. Actual results may differ. Factors that could cause actual results to differ are included there as well as in our filings with the SEC. With that, I will turn the call over to MaryAnn.

Thanks, Kristina. Good morning, and thank you for joining our call. Last week, we announced the strategic acquisition of North Wind Midstream for just under $2.4 billion. North Wind provides sour gas gathering and treating services in Lea County, New Mexico. The system adds over 200,000 dedicated acres in the Delaware Basin, 200-plus miles of gathering pipelines, 2 operating acid gas injection wells and 1/3 permitted. The system currently has 150 million cubic feet per day of sour gas treating capacity.

We will be completing the expansion to 440 million cubic feet per day expected to be online in the second half of next year. The system is supported by minimum volume commitments by top regional producers. The transaction is expected to be immediately accretive to MPLX's distributable cash flow and represents a 7x multiple on forecasted 2027 EBITDA after the treating system reaches full capacity.

The anticipated mid-teen unlevered return is inclusive of incremental capital spend associated within process expansion activity. Increased crude drilling activity in the eastern edge of the Northern Delaware Basin has been enabled by increased sour gas treating and AGI well capacity provided by these assets.

The assets will provide prompt treatment solutions for existing and new producer customers. Our fee structure comprises gathering, compression, processing as well as more extensive CO2 and H2S treating. The higher levels of CO2 and H2S merits a higher fee structure compared to other regions. On average, this gets to an aggregated rate significantly above other regions. These assets are complementary and adjacent to our existing Delaware Basin natural gas system and will expand MPLX's treating and blending operations.

The addition of 200,000 dedicated acres will increase MPLX's access to natural gas and NGL volumes, the optionality to direct these new volumes through our integrated system will accelerate our growth opportunities in the Permian. MPLX has also completed 2 previously announced Permian-based acquisitions. In June, we closed on the acquisition of an incremental 5% stake in the Matterhorn Express pipeline further enhancing our integrated natural gas value chain in the Permian Basin.

In July, we closed on the remaining 55% interest in the BANGL NGL pipeline system. Full ownership of BANGL's and its expansion opportunities enhance our Permian platform as we connect growing NGL production from the wellhead to our recently announced Gulf Coast fractionation facilities. The progress and execution of our strategic initiatives give us conviction in the sustainability of our mid-single-digit adjusted EBITDA growth outlook for 2025 and beyond.

In the second quarter, we reported adjusted EBITDA of $1.7 billion, a 2% increase year-over-year. For the first half of the year, we achieved 5% adjusted EBITDA growth versus the first half of 2024. In the Marcellus and Utica, rig counts remain steady and volumes remain strong. Longer laterals are resulting in higher production volumes and we expect volumes to grow in the second half of the year.

Producer consolidation further illustrates the value seen in the liquids-rich acreage of the Utica where condensate development activity continues to increase. In the Permian, steady drilling activity, rising gas oil ratios and the progression of export projects will support growth opportunities for our business. More broadly, we expect natural gas demand will accelerate over the next few years to provide increased electricity generation required for data centers and overall electric grid demand.

As demand for natural gas-powered electricity rises, MPLX is well positioned to support the development plans of its producer customers. MPLX is expanding its core business by constructing process facility -- processing facilities on a just-in-time basis, maximizing the utilization of existing assets, optimizing value chains and strengthening its strategic partnership with MPC. MPLX is advancing its strategic growth objectives within the Permian. And our seventh processing plant, secretariat, is expected to be online by the end of 2025. Secretariat's 200 million cubic feet per day of processing capacity will increase MPLX's total Permian processing capacity to 1.4 billion cubic feet per day.

We are progressing the expansion of BANGL's mainline from 250,000 to 300,000 barrels per day. which we expect to enter service in the second half of next year. BANGL is an instrumental piece of MPLX's integrated Permian NGL value chain. -- and it will deliver volumes to MPLX's 2 Gulf Coast fractionation facilities, which are being constructed near the Galveston Bay refinery.

The first front as well as our joint venture export terminal is expected to enter service in 2028. And we anticipate the second frac will enter service in late 2029. Once complete, MPLX's fully integrated NGL value chain will stretch from the wellhead to water on the Gulf Coast and will supply LPGs to a growing global market. Within natural gas, we are advancing our value chain strategy. MPLX and its partners recently upsized the Traverse natural gas pipeline from 1.75 to 2.5 Bcf per day following strong customer demand.

The additional capacity for bidirectional service between Agua dose and Houston area highlights the value shippers describe to assessing multiple premium markets on the Gulf Coast. The continued build-out of our Permian to Gulf Coast natural gas system enhances our ability to provide shippers with premium market access and superior flexibility while enhancing MPLX's natural gas value chain through additional growth opportunities.

MPLX has announced $3.5 billion of bolt-on transactions in 2025 and we remain on track to invest $1.7 billion on our organic growth plans in 2025, have already deployed 40% of this capital in the first half of the year. Over 90% of MPLX's total growth capital is being allocated to opportunities within our natural gas and NGL services segment.

In the Marcellus, our largest operating region, construction of our Harmon Creek III processing plant and fractionation capacity aligned with producer drilling plans. This new complex will feature a 300 million cubic feet per day gas processing plant and a 40,000 barrel per day de-ethanizer supported by strong producer commitments. By the second half of next year, we anticipate MPLX's gas processing capacity in the Northeast will reach 8.1 billion cubic feet per day and fractionation capacity will reach 800,000 barrels per day.

In our crude oil and products logistics segment, we are expanding crude gathering infrastructure in the Permian and Bakken basins, advancing butane blending initiatives at our product terminals developing new market outlets, driving organic volume growth through our integrated network and pursuing other high-return projects aimed at maximizing the utilization of our assets.

We are firmly committed to growing the partnership through our lens of strict capital discipline. We expect mid-teen returns on our investments and our confidence that successful execution of these projects will extend the durability of our mid-single-digit growth trajectory. This positions us to continue reinvesting in the business while supporting consistent annual distribution increases.

Our strong financial flexibility enables us to pursue strategic acquisitions that complement our organic growth plans. We stay disciplined in our approach and have ample capacity to pursue more opportunities while maintaining leverage below 4x. With a pipeline of growth opportunities, we are well positioned to generate resilient cash flows that underpin our commitment to deliver long-term value and return capital to unitholders.

Now let me turn the call over to Chris to discuss our operational and financial results for the quarter.

Thanks, MaryAnn. Slide 10 outlines the second quarter operational and financial performance highlights for our crude oil and products logistics segment. Segment adjusted EBITDA increased $39 million when compared to the second quarter of 2024. The increase was driven by higher rates and throughputs across our systems, partially offset by higher variable operating expenses. Pipeline volumes were up year-over-year, primarily due to increased refinery demand and incremental gathering volumes in the Permian.

Terminal volumes were flat year-over-year. Moving to our Natural Gas and NGL Services segment on Slide 11. And Segment adjusted EBITDA decreased by $2 million compared to the second quarter of 2024 as growth from equity affiliates was offset by higher operating expenses and project spending. Higher project spending in the second quarter included significant planned maintenance at 13 plants in the Marcellus, Bakken and Rockies regions, all of which were safely and successfully executed by our operations teams.

Gathered volumes decreased 1% year-over-year as growth in the Southwest was primarily offset by less dry gas production in the Utica and declining production in the Rockies. Processing volumes increased 2% year-over-year, primarily from increased throughput in the Utica and Permian basins. Processing volumes in the Utica have increased 13% year-over-year, showing the value of the liquids-rich acreage.

Marcellus processing utilization was 92% for the quarter, reflecting strong producer activity in the region. Total fractionation volumes declined 5% year-over-year, primarily due to lower ethane recoveries in the Marcellus due to downstream third-party maintenance and outage time. Moving to our second quarter financial highlights on Slide 12. Adjusted EBITDA of $1.7 billion and distributable cash flow of $1.4 billion increased 2% and 1%, respectively, from the prior year.

Project-related expense increased over $30 million in the quarter, and we anticipate an incremental $40 million increase from second quarter to third quarter, primarily due to some planned tank maintenance within refinery logistics. MPLX returned nearly $1 billion to unitholders and distributions and $100 million in unit repurchases.

We retired $1.2 billion of senior notes scheduled to mature in June and ended the quarter with a cash balance of $1.4 billion. Looking forward, MPLX intensive to finance its recently completed acquisition of the remaining 55% of the BANGL pipeline system and its announced acquisition of North 1 Midstream with that. MPLX maintains a strong balance sheet and the ability to keep leverage below our comfort level of 4x.

Now let me hand it back to MaryAnn for some concluding thoughts.

Thanks, Chris. MPLX has demonstrated its ability to grow both cash flows and unitholder distributions by executing on its strategic priorities. Year-to-date, we have returned $2.2 billion to unitholders inclusive of $200 million in unit repurchases as the value proposition for our units remain strong. Through prudent capital allocation, cost control and operational optimization, we've achieved a 7% compound annual growth rate in both adjusted EBITDA and distributable cash flows over the past 4 years.

Year-to-date, MPLX has announced $3.5 billion of bolt-on transactions. These assets create immediate value for unitholders and enhance MPLX's growth platform in a capital-disciplined manner. We believe the integration of these assets will further strengthen MPLX's ability to deliver mid-single-digit adjusted EBITDA growth.

Our strong and growing cash flow profile supported by a robust 1.5x distribution coverage and low leverage has enabled us to support our quarterly distribution, which most recently increased by 12.5% in the third quarter of last year. Looking ahead, our growing portfolio is well positioned to sustain this pace of annual distribution growth.

In summary, MPLX is well positioned to capitalize on opportunities that fit our strategic road map as we execute our strategy targeting mid-single-digit adjusted EBITDA growth as a strategic asset for Marathon, MPLX provides $2.5 billion annually in cash to MPC through its growing distribution. MPLX plays a vital role in advancing shared value creation initiatives, further reinforcing the strength of our partnership.

Our unwavering focus on safety and operational excellence, strategic growth opportunities and strong financial flexibility enable us to generate resilient cash flows. This, in turn, supports our commitment to delivering peer leading capital returns to unitholders -- now let me turn the call over to Kristina.

Thanks, MaryAnn. As we open the call for your questions, as a courtesy to all participants, we ask that you limit yourself to 1 question and 1 follow-up. If time permits, we'll reprompt for additional questions. Operator, we're now ready for questions. .

[Operator Instructions]

Our first question in the queue is from John Mackay with Goldman Sachs.

Can you talk about the ramp on North Wind from here through the second half of 2016? And then after that, how to think about some of the downstream processing and NGL growth opportunities? And maybe as part of that, just clarify whether or not those downstream opportunities are reflected in the 7x 27 multiple?

John, thanks for the question. So First of all, I just want to say we think the economics in this transaction are extremely compelling, as you can see. And any incremental capital, and I'll share with you how that should unfold here. Any of the incremental capital that we have assumed is already embedded in those economics as well.

But to answer your question, when we look at the completion by 2026, so by the end of next year, we should be at the run rate EBITDA that we are referencing that supports our roughly 7x EBITDA multiple, which means by 2027, we will have reached that EBITDA that will be ongoing. So throughout this time period, 2026, these projects to complete to get us to the 440 as well as the permitted third AGI well, all of those activities are well in hand. I'm going to ask Dave to address your second question sort of, which is the opportunities on further beyond that.

Yes. Thank you, Mary Anne. And so John, just to touch on that, let me be first clear that those incremental growth opportunities are not in our base economics and our base assumptions of Northwind. With that being said, it does provide the platform for a lot of incremental growth opportunities that we are currently evaluating. And not only just growth, but also incremental optimization and commercial optionality as we go forward with the North Wind. So I think over the next year or so, as we continue to build out and ramp up the North Wind volume, we'll continue to evaluate those commercial and growth opportunities. And I think those will be all accretive to the base investment.

All right. That's great. I appreciate that. Maybe looking a little wider, you've announced a lot of bolt-ons and projects over the last year. It's given some longer-term visibility on EBITDA growth. Could you talk a little bit about the distribution, one, kind of what you're thinking for this year? And then looking forward, kind of how many years of 12.5% growth could we expect from here?

Yes. Sure, John. Thank you. So look, we believe our 12.5% distribution increase is supported very durable by the growth that we are trying to deliver. I mentioned 7% growth. We've seen that over the last few years, both in EBITDA and in distributable cash flows. So certainly, as we've been committing, we think that 12.5% 2026 and beyond, certainly for the next few years is very durable. So most definitely 12.5% well within our sights, and you can continue to see the opportunities. Dave mentioned a few of them here. You know the work that we're putting together, both on our capital plan. We've got assets in the Permian coming online. I mentioned Secretariia that will be completed by the end of this year. all of these commitments support our durable cash flows and therefore, the 12.5% distribution increase that we've been committing to.

The next question in the queue is from Manav Gupta with UBS.

Congrats on the good deal. My first question is, Marianne, there were some recent comments made about LPG exports being in the bear market and why it probably is not good to invest in these. You are obviously building your fracs and then your partner is going to export some of the stuff. So just trying to understand what gives you the confidence that you and your partner can make the economics work on the new fracs as well as exporting them given some of the bearish market sentiment on LPG exports.

Manav, thank you for the question. We are very confident in our ability to fill those fracs. As you know, we've committed to completion frac 1, 2028, Frac 2, 2029. One of the other elements that we've been sharing in addition to that, we've got third-party contracts that will also expire that will obviously come across our system. We continue to believe the economics will be there. We recognize sort of some of those comments as well. But we're highly confident in our ability both to fill those fracs and see the economics in that export model.

.

Perfect. And then a quick follow-up. The overall Permian growth strategy, you're pursuing multiple ways to grow your Permian alone with JV partners. Can you just talk about how you're looking to beat this Permian growth strategy for over the next 2 or 3 years? .

You're welcome. Thank you. As you know, we've been working on our Permian growth strategy for the last few years. We think this acquisition that we've talked about North wins. One, both adjacent and complementary to our current system. We have completed other acquisitions, the completion of BANGL as an example. We just closed that, giving us 100%. We've talked about moving that from $250 to $300. That's well on its way. when you look at our capabilities in this region, obviously, this particular northern edge of the Delaware has some of the best rock, we think in the Permian lower gas to oil ratios.

Obviously, it comes with some complexity given the H2S and CO2 content, but we can provide the processing and treating capabilities here and works extremely nicely with the rest of the commitments we've made in the Permian. So we think for the next few years, we can continue to look for other opportunities.

And as we build out this comprehensive system, we should be able to demonstrate our commitment and our ability to deliver on this Permian strategy.

And the next question in the queue comes from Keith Stanley with Wolfe Research. .

MaryAnn, you said at the end of your prepared remarks that acquisitions will strengthen the ability to generate mid-single-digit growth as you get larger, should we think of acquisitions as a component of getting to the mid-single-digit growth? Or should we think of that as incremental to the growth rate? .

Yes. Keith. When we think about our strategy, we've said we'll put capital to work organically -- this year, it's in a range of about 1.7%. As you know, we've got Secretariat. We've got the first phase of our frac. We've got Harmon Creek well on its way. So we clearly see opportunities for organic growth. And then when we look at M&A, we also believe there are opportunities there. So it isn't as if we start out the year with an allocation of how much is M&A and how much of capital, we look at all of those opportunities. They must meet our strategic rationale. Obviously, our commitment to mid-single-digit growth is a critical component -- and then lastly, we want to be sure that they can generate mid-teens returns.

All of those, I mean, the way we put capital to work should continue to support our ability to grow EBITDA and then, therefore, support our distribution. I hope that answers your question.

It does. Second one, on North wind, can you say any sense of how long the existing processing and transportation contracts are for those assets? And maybe walk through the mechanics of how you would eventually control the NGLs as the gatherer and treater, would you need to add processing to the footprint? Or any details you can provide. .

Sure. So first, I think your first question was kind of what is the contract duration on processing. And we're probably somewhere those contracts today, somewhere in the range of 2 to 3 years on those processing contracts. Keep in mind, overall, and I think I mentioned this in the prepared remarks as well, these contracts that we have for these MVCs are average contract life of 13 years. So 80% of this revenue is MVC just to be sure that I was clear on that.

And then some of the top producer customers that we -- I mentioned there are actually customers that are operating today on our system. But let me look at, Dave, and I'm going to ask him to give you a little more color on your question.

Thank you, MaryAnn. So Keith, I touched on it a little bit earlier. So as these contracts roll off and we have control and access to the why we don't need that volume in our announced BANGL acquisition and our Gulf Coast fractionation and export project. this incremental volume, as I tried to touch on a little bit earlier, gives us flexibility and optionality on how and where and when we want to move those volumes. And that's probably the most exciting part about this. So as we look forward, not only this opportunity, but as we think about some of the growth opportunities that MaryAnn touched on, it's not just grow to grow, but as growth increase the integration, the optionality and flexibility of our entire value chains. Hopefully, that helps a little bit.

That helps, and I missed the 13-year commentary. So thanks for that as well. .

You're most welcome. Thank you.

The next question in the queue is from Theresa Chen with Barclays. .

Following up on the commentary related to North wind. Just a question of clarification on the CapEx. From here, the current to the full 440 MMcf per day. How much incremental CapEx do you think will be necessary to achieve that? .

Yes. So we estimate in a range of about $500 million between now and the next 12 months that will complete the $440 million as well as the third already permitted AGI well. So 2 of them currently operating, 1/3 is permitted. So within the next 12 months, just under $500 million, and most of that's already been started.

And then turning to the residue gas side of things. In addition to your NGL infrastructure build-out, you've made significant progress in growing this asset base via your JV -- looking at the long-term visible demand drivers for gas, MaryAnn, what do you think are the logical strategic mix to augment your exposure here. Is it a matter of more gas transmission?

Is it something more direct on the gas to power side of things? Is it liquefaction? What are your thoughts here?

Yes. Thanks, Theresa. I'm going to pass it to Dave and he'll take your questions.

Theresa, I'll kick it off and maybe I can ask some of my peers if they want to add on to it when you think about data centers and some of the other growth. But yes, you touched on it. And -- as we think about the Permian and specifically and as you know, our strategy, a lot of long-haul pipelines out of there. We do not think that there is an overbuild situation in long-haul pipe. Let me start with that.

So whether it be Whistler, Black come Matterhorn and or increased equity ownership in that, you could see that we have a lot of confidence in the growth -- not only the growth profile of the Permian on the gas side, but also the demand side of it.

So as you know, down in the Gulf Coast with the with a lot of the LNG activity, but also with the increased growing activity around data centers, we believe, not only from a supply, but also from a demand perspective, there's a lot of opportunity. And I think we've proven that with the project we've announced most recently. So -- the 1 we haven't touched on is Traverse, so not only just the long-haul pipes out of the basin, but getting our shipping customers the utmost flexibility to get those premium markets in addition to getting out of the basin, we think, is a key part of our strategy.

So as we go forward, it's an increase growth, optionality, flexibility and access to those premium markets for the gas coming out of the Permian. So hopefully, that gives you a little bit of color how we're thinking about that strategy.

Next question in the queue is from Jeremy Tonet with JPMorgan.

Good morning. I was just wondering if you could expand a bit post the acquisition on your New Mexico strategy here. It's a bit more difficult to operate in the state given the regulatory framework and the handling that's needed with this production, but the growth is very strong as noted.

And it seems like this toehold gives you even more opportunity there and there's not too many players right now. So just wondering if you could talk a bit more on your New Mexico strategy and competitive backdrop.

Yes, Jeremy, we'd be happy to because I think you characterized it well, and I think it's consistent really with the way that we think about growth. I'm going to ask Greg to give you some incremental thoughts here. .

Thanks, MaryAnn. Yes. This is Jeremy. This is a really exciting area for us. We have been growing this space organically in terms of our processing plants to producer customers, acreage dedication that starting on the Texas side of the line, but it's gradually expanded into Leonetti County, New Mexico. And that -- even though our plants are right on the Texas side of that line, a lot of our growth has continued to be on the Leonetti County, New Mexico side. .

the growth is also in terms of crude oil production moved to the north and east towards that North-South New Mexico, Texas border. And that's because it's some of the best crude oil rock in the whole basin, particularly the Avalon formation, which is shallower. It's about 8,500 feet depth instead of 1,200 -- or 12,000, excuse me. So it is more economic produced, it's higher IPs, it's lower gas oil ratio. So it's the most attractive economic crude production area -- the issue is that that gas comes with more CO2 and H2S, -- it's much more sour. And that really is what the North wind developers recognize when they built that system.

Some of our existing base customers are -- have moved further to that side, and we've deployed treating throughout our system, particularly on the New Mexico side of our gathering system. This acquisition is really going to augment our ability to treat even more sour gas and also provide blending opportunities because of the proximity and potential connectivity here.

This system, if you look on a map, it wraps around the north and east side of our existing gathering system. So it really is adjacent complementary as MaryAnn has mentioned. So we think there'll be more organic opportunities that can take advantage of this expanded treating capability and gathering that we have in 1 of the most attractive areas to drill in the basin. .

Got it. That's helpful there. Maybe just continuing, do you see more bolt-on opportunities adjacent to your footprint that could offer the types of benefits that you see with North winds? .

I think we looked at -- if we were to build a system organically, the Northwind system would be 1 that we would have built. So in terms of looking for bolt-ons, I don't necessarily would say that there's opportunities there. We'll always look for those if they are a strategic fit and makes sense. But this 1 would have made sense as an organic build-out just as much as a bolt-on. And it happens to be that it's right next to our system, and it's right in the area where we see a lot of growth. So this accelerates our plans that probably organically we would have looked at a anyway. .

Jeremy, it's MaryAnn. I would say Greg has already said it, but at the risk of repeating, I'll say, we've said it's adjacent and it's complementary. I'd like to say it's about as perfectly as 1 could expect -- and then you have the economics that I think we've tried to share with you, we think they're pretty compelling, supported by the average contract life of 13 years over 200,000 dedicated acres in the Delaware. And none of the economics when we talk about that roughly 7x multiple reflect any upside from that. So -- we're pretty pleased with this, and we think it will continue to give us opportunities to grow beyond what we've been sharing with you here.

And the final question in the queue is from Michael Blum with Wells Fargo. .

Apologies, 1 more clarification question on the Northwind deal. I guess as it relates to the gas and liquids that you'll gain access to eventually, can you just clarify, will you be able to accommodate those incremental volumes on your existing planned NGL pipe fracs, export docks, et cetera? Or would you need to add capacity? And if so, what type of investment will we be looking at? .

And no problem. I'm going to ask Chris to share his thoughts to your questions.

Yes. Michael, what I would remind you of is that when we announced the Gulf Coast fractionators and related NGL value chain, we actually had full line of sight to filling those fracs and angle. So as we sit today, those -- that value chain is full. So when we think about the 70 of liquids that comes with this, and I will say the liquid side of this come immediately. When I say this, the Northwind liquids. So it's -- call it between 50 and 70 a day of liquids. Those are incremental to the liquids that we already have access to.

So we'll be looking to explore other opportunities to drive economic value out of those. It does provide optionality, right, as we think about our existing NGL value chain as to how we do most economically utilize that value chain. So that's something I know the team has been looking at. And Sean, I don't know if there was anything you might want to add.

Yes. Michael, this is Sean. On top of what Chris just mentioned, as you know earlier this year, MaryAnn mentioned earlier that we're at 250,000 barrels per day on BANGL already this year with expansion in the second half of 2016 to go to $300,000. And as Chris mentioned, that optionality that will give us tremendous flexibility to continue to execute on our strategy. So we've got -- we feel really good at the spot we're in, and we'll continue looking to maximize the organic that now North wind bring options to us.

Got it. That's all I had today. .

With no further questions, I'll turn the call back over to Kristina. .

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