Goodwill and Intangibles

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

MPLX annually evaluates goodwill for impairment as of November 30, as well as whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit with goodwill is less than its carrying amount. As a result of the Merger and subsequent changes to our internal organization structure, the number of reporting units was reduced from 12 to 6 in conjunction with our annual impairment test, however, this change in structure did not have an impact on our operating segments. Our reporting units are one level below our operating segments and are determined based on the way in which segment management operates and reviews each operating segment. As a result of our change in reporting units, we performed our goodwill impairment assessment prior to the change in reporting units in addition to performing an impairment assessment immediately following the change in our reporting units. Significant assumptions used to estimate the reporting units’ fair value include the discount rate as well as estimates of future cash flows, which are impacted primarily by producer customers’ development plans, which impact future volumes and capital requirements. After performing our evaluations related to the impairment of goodwill, we recorded an impairment of $1,156 million prior to our change in reporting units and an additional impairment of $41 million subsequent to our change in reporting units, both within

the G&P operating segment. The remainder of the reporting units fair values were in excess of their carrying values. The impairment was primarily driven by updated guidance related to the slowing of drilling activity which has reduced production growth forecasts from our producer customers. This resulted in goodwill totaling approximately $9.5 billion as of December 31, 2019, with all but one of our six reporting units having goodwill.

The fair value of the reporting units for the interim goodwill impairment analysis described above was determined based on applying both a discounted cash flow or income approach as well as a market approach. The discounted cash flow fair value estimate is based on known or knowable information at the measurement date. The significant assumptions that were used to develop the estimates of the fair values under the discounted cash flow method included management’s best estimates of the expected future results and discount rates, which range from 9.0 percent to 10.0 percent. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the interim goodwill impairment test will prove to be an accurate prediction of the future. The fair value measurements for the individual reporting units’ overall fair values, and the fair values of the goodwill assigned thereto, represent Level 3 measurements.

The changes in carrying amount of goodwill were as follows for the periods presented:



(In millions)	L&S		G&P			Total
Gross goodwill as of December 31, 2017	$	162	$	2,213		$	2,375
Accumulated impairment losses	—		(130		)	(130		)
Balance as of December 31, 2017	162		2,083			2,245
Acquisitions⁽¹⁾	7,072		699			7,771
Balance as of December 31, 2018	7,234		2,782			10,016
Impairment losses	—		(1,197		)	(1,197		)
Acquisitions⁽¹⁾	488		229			717
Balance as of December 31, 2019	7,722		1,814			9,536

Gross goodwill as of December 31, 2019	7,722		3,141			10,863
Accumulated impairment losses	—		(1,327		)	(1,327		)
Balance as of December 31, 2019	$	7,722	$	1,814		$	9,536


(1)	Acquisitions in 2018 are inclusive of the Mt. Airy Terminal acquisition as well as the Merger while acquisitions in 2019 are inclusive of measurement period adjustments related to the previously mentioned transactions.

Intangible Assets

MPLX’s intangible assets are comprised of customer contracts and relationships. The weighted average amortization period for intangible assets acquired during 2019 was approximately 9 years. Gross intangible assets with accumulated amortization as of December 31, 2019 and 2018 is shown below:



		December 31, 2019							December 31, 2018
(In millions)	Useful Life	Gross		Accumulated Amortization⁽¹⁾			Net		Gross		Accumulated Amortization⁽¹⁾			Net
L&S	6 - 8 years	$	283	$	(45	)	$	238	$	249	$	(14	)	$	235
G&P	6 - 25 years	1,288		(256		)	1,032		1,253		(129		)	1,124
		$	1,571	$	(301	)	$	1,270	$	1,502	$	(143	)	$	1,359


(1)	Amortization expense attributable to the G&P segment for the years ended December 31, 2019 and 2018 was $127 million and $49 million, respectively. Amortization expense attributable to the L&S segment for the year ended December 31, 2019 and 2018 was $31 million and $14 million, respectively.

Estimated future amortization expense related to the intangible assets at December 31, 2019 is as follows:



(In millions)
2020	$	155
2021	155
2022	155
2023	155
2024	150
Thereafter	500
Total	$	1,270