Marathon Petroleum Considers $15 Billion MPLX Asset Sale

Marathon Petroleum Co, the largest U.S. independent refiner, is exploring the sale of assets of its pipeline subsidiary MPLX LP worth as much as $15 billion, people familiar with the matter said on Wednesday. The divestment would give the Findlay, Ohio-based company a cash boost at a time when a looming economic slowdown triggered by the global coronavirus outbreak and lower oil prices are weighing on its prospects. Marathon’s shares have lost half their value in the last three weeks.

Marathon is exploring a sale of MPLX’s gathering and processing (G&P) business, which transports hydrocarbons from drilling sites to major pipelines, the sources said. Intrepid Financial Partners is advising on a sale process for the business, which is at its early stages, the sources added. If there is a deal, it could involve divesting a majority or minority stake in that business, according to the sources.

The sources asked not to be identified because the deliberations are confidential. Marathon, MPLX and Intrepid did not immediately respond to requests for comment.

Marathon had previously said it had formed a special board committee to explore options for its midstream operations, but had not announced a specific course of action.

Marathon Petroleum shares ended trading down 9% in New York, giving it a market value of $20.3 billion. Its debt obligations totaled $29 billion as of the end of December, $20.1 billion of which stemmed from MPLX and its subsidiaries. MPLX shares ended trading down 8.7%, giving it a market value of $16.3 billion.

Under pressure from activist shareholders, including hedge funds Elliott Management Corp and D.E. Shaw Group, Marathon announced in October it would explore options for its pipeline and storage operations, and look at spinning off its retail gas station business Speedway.

Marathon held negotiations to sell Speedway to Japan’s Seven & i Holdings Co for more than $20 billion, but the talks collapsed earlier this month after banks balked at financing the 7-Eleven convenience store operator’s bid, one of the sources said. A sale of the MPLX assets could help compensate for that abandoned divestment.

MPLX’s G&P assets generated earnings before interest, tax, amortization and depreciation of $1.75 billion in 2019, according to the company’s full-year results statement.

MPLX is structured as a tax-efficient master limited partnership, in which Marathon is the general partner. It is not clear whether Marathon would choose to keep MPLX’s logistics and storage businesses should the G&P assets be successfully divested. One option would be to move MPLX up to Marathon, the sources said.

Marathon, which every day processes 3 million barrels of crude oil capacity across 16 refineries, is also currently looking for a replacement for its CEO Gary Heminger.

(Reporting by David French; Editing by Marguerita Choy and Tom Brown)