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Marathon Petroleum Corp. Drops Down Terminal, Pipeline and Storage Assets to MPLX for $2 Billion

Marathon Petroleum, March 2, 2017

Marathon Petroleum Corp. (MPC)and MPLX LP recently closed a transaction in which MPC contributed certain terminal, pipeline and storage assets to MPLX for total consideration of $2.015 billion.  The assets include 62 light-product terminals with approximately 24 million barrels of storage capacity; 11 pipeline systems consisting of 604 miles of pipeline; 73 tanks with approximately 7.8 million barrels of storage capacity; a crude oil truck unloading facility at MPC's refinery in Canton, Ohio; and eight natural gas liquids storage caverns in Woodhaven, Michigan, with approximately 1.8 million barrels of capacity.

"This drop-down of additional high-quality logistics assets to MPLX represents the first of several drops expected to occur in 2017, and is an important part of our plan to unlock the value of our midstream business for investors," said MPC Chairman, President and CEO Gary R. Heminger. "The stable, fee-based earnings from these assets will add scale and diversification to MPLX's portfolio of high-quality midstream assets."

MPC is contributing these assets in exchange for the issuance of $504 million in MPLX equity and $1.511 billion in cash. The equity to be issued in the transaction consists of MPLX common units and general partner units to maintain MPC's 2 percent general partner interest in MPLX. The units will be valued based on the 10-day volume weighted average price of MPLX common units prior to the closing. The total consideration equates to an 8 times multiple of the $250 million of earnings before interest, taxes, depreciation and amortization these businesses are expected to generate in the next 12 months. The transaction is expected to be immediately accretive to MPLX's 2017 distributable cash flow. The terms of the acquisition were approved by the MPLX Board of Directors following the approval of the transaction by its independent conflicts committee. The conflicts committee was advised by Jefferies LLC as to financial matters and Akin Gump Strauss Hauer & Feld LLP as to legal matters.


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