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MPLX Q3 Earnings Beat Estimates on Higher Throughput Volumes

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MPLX LP (MPLX - Free Report) reported third-quarter earnings of 61 cents per unit, beating the Zacks Consensus Estimate of 59 cents. However, the figure declined by a penny from the year-ago level.

Revenues of $2,280 million were higher than third-quarter 2018 sales of $1,712 million. Also, the top line beat the Zacks Consensus Estimate of $2,245 million.

The better-than-expected results were supported by higher throughput volumes, strong performance of its core business and the acquisition of Andeavor Logistics. The positives were partially offset by lower weighted average natural gas liquids prices and higher operating expenses.

MPLX LP Price, Consensus and EPS Surprise

MPLX LP Price, Consensus and EPS Surprise

MPLX LP price-consensus-eps-surprise-chart | MPLX LP Quote

Segmental Highlights

Its operating segments’ third-quarter 2019 results were significantly boosted by the Andeavor Logistics acquisition, completed on Jul 30, 2019.

MPLX’s operating income from the Logistics and Storage segment jumped from $468 million a year ago to $713 million. The reported figure beat the Zacks Consensus Estimate of $566 million. The year-over-year upside is attributable to strong performance of its core business. Total pipeline throughput volume of 5,226 thousand barrels per day increased a whopping 54% from the year-ago level.

Operating income from the Gathering and Processing segment increased to $213 million from $204 million in the prior-year quarter due to higher volumes, partially offset by lower weighted average natural gas liquids prices.

Costs and Expenses

Total costs and expenses in the quarter were recorded at $1,354 million, up from the year-ago level of $1,040 million, primarily due to higher operating expenses.

Cash Flow

Distributable cash flow available to limited partners in third-quarter 2019 was $946 million, providing 1.42x distribution coverage, up from $766 million in the year-ago period. Distribution per unit was 67.75 cents in the reported quarter. This marks a 6.3% hike from the year-ago period and 1.5% sequential growth, representing the 27th consecutive quarterly distribution increase.  

Net cash flow from operating activities in the quarter under review jumped to $1,036 million from $737 million recorded in the corresponding period of 2018.

Balance Sheet

As of Sep 30, 2019, the partnership’s cash and cash equivalents were $41 million. Its total debt amounted to $19.8 billion, while debt-to-capitalization ratio was 52.6%.

Outlook

The partnership expects to complete the Sherwood 13 processing facility in fourth-quarter 2019. It has two more facilities under construction in the prolific Permian Basin.

MPLX now expects capital expenditure of around $2 billion for growth purposes in 2020, which is $600 million lower than the previous guidance. Of the total expenditure, around 75% will likely be targeted toward the Logistics and Storage segment.

Zacks Rank and Stocks to Consider

Currently, MPLX has a Zacks Rank #5 (Strong Sell). Some better-ranked players in the energy space are Lonestar Resources US Inc. (LONE - Free Report) , CNX Resources Corporation (CNX - Free Report) and Contango Oil & Gas Company (MCF - Free Report) . All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lonestar’s 2020 earnings per share are expected to rise 77% year over year.

CNX Resources’ 2019 earnings per share have witnessed two upward movements and no downward revision in the past 30 days.

Contango Oil & Gas’ bottom line for the current year is expected to rise around 87% year over year.

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