Equity Method Investments

3 Months Ended

Mar. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Investments and Noncontrolling Interests [Text Block]

Investments and Noncontrolling Interests

The following table presents MPLX’s equity method investments at the dates indicated:



	Ownership as of	Carrying value at
	March 31,	March 31,		December 31,
(In millions, except ownership percentages)	2020	2020		2019
L&S
MarEn Bakken Company LLC	25%	$	479	$	481
Illinois Extension Pipeline Company, L.L.C.	35%	271		265
LOOP LLC	41%	239		238
Andeavor Logistics Rio Pipeline LLC⁽¹⁾	67%	200		202
Minnesota Pipe Line Company, LLC	17%	190		190
Whistler Pipeline LLC⁽¹⁾	38%	163		134
W2W Holdings LLC⁽¹⁾⁽²⁾	50%	76		—
Wink to Webster Pipeline LLC⁽¹⁾⁽²⁾	15%	—		126
Explorer Pipeline Company	25%	81		83
Other⁽¹⁾		55		55
Total L&S		1,754		1,774
G&P
MarkWest Utica EMG, L.L.C.⁽¹⁾	57%	712		1,984
Sherwood Midstream LLC⁽¹⁾	50%	546		537
MarkWest EMG Jefferson Dry Gas Gathering Company, L.L.C.⁽¹⁾	67%	302		302
Rendezvous Gas Services, L.L.C.⁽¹⁾	78%	167		170
Sherwood Midstream Holdings LLC⁽¹⁾	52%	155		157
Centrahoma Processing LLC	40%	150		153
Other⁽¹⁾		206		198
Total G&P		2,238		3,501
Total		$	3,992	$	5,275


(1)	Investments deemed to be VIE’s. Some investments included within “Other” have also been deemed to be VIE’s.


(2)	During the three months ended March 31, 2020, we contributed our ownership in Wink to Webster Pipeline LLC to W2W Holdings LLC.

For those entities that have been deemed to be VIE’s, neither MPLX nor any of its subsidiaries have been deemed to be the primary beneficiary due to voting rights on significant matters. While we have the ability to exercise influence through participation in the management committees which make all significant decisions, since we have equal influence over each committee as a joint interest partner and all significant decisions require the consent of the other investors without regard to economic interest, we have determined that these entities should not be consolidated and apply the equity method of accounting with respect to our investments in each entity.

Sherwood Midstream has been deemed the primary beneficiary of Sherwood Midstream Holdings due to its controlling financial interest through its authority to manage the joint venture. As a result, Sherwood Midstream consolidates Sherwood Midstream Holdings. Therefore, MPLX also reports its portion of Sherwood Midstream Holdings’ net assets as a component of its investment in Sherwood Midstream. As of March 31, 2020, MPLX has a 24.1 percent indirect ownership interest in Sherwood Midstream Holdings through Sherwood Midstream.

MPLX’s maximum exposure to loss as a result of its involvement with equity method investments includes its equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of its compensation received for the performance of the operating services. MPLX did not provide any financial support to equity method investments that it was not contractually obligated to provide during the three months ended March 31, 2020.

During the first quarter of 2020, we assessed certain of our equity method investments for impairment as a result of a number of first quarter events and circumstances as discussed in Note 1. During the first quarter of 2020, we recorded an other than temporary impairment for three joint ventures in which we have an interest. Impairment of these investments was $1,264 million, of which $1,251 million was related to MarkWest Utica EMG, L.L.C. and its investment in Ohio Gathering Company, L.L.C. The fair value of the investments was determined based upon applying the discounted cash flow method, which is an income approach. The discounted cash flow fair value estimate is based on known or knowable information at the interim measurement date. The significant assumptions that were used to develop the estimate of the fair value under the discounted cash flow method include management’s best estimates of the expected future cash flows, including prices and volumes, the weighted average cost of capital and the long-term growth rate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As such, the fair value of these equity method investments represents a Level 3 measurement. As a result, there can be no assurance that the estimates and assumptions made for purposes of the impairment test will prove to be an accurate prediction of the future. The impairment was recorded through “Income from equity method investments.” The impairments were largely due to a reduction in forecasted volumes gathered and processed by the systems operated by the joint ventures.

Summarized financial information for MPLX’s equity method investments for the three months ended March 31, 2020 and 2019 is as follows:



	Three Months Ended March 31, 2020
(In millions)	VIEs			Non-VIEs		Total
Revenues and other income	$	(217	)	$	337	$	120
Costs and expenses	104			132		236
Income from operations	(321		)	205		(116		)
Net income	(337		)	186		(151		)
(Loss)/income from equity method investments⁽¹⁾	$	(1,222	)	$	38	$	(1,184	)


(1)	Includes the impact of any basis differential amortization or accretion in addition to the impairment of $1,264 million.



	Three Months Ended March 31, 2019⁽¹⁾
(In millions)	VIEs		Non-VIEs		Total
Revenues and other income	$	155	$	391	$	546
Costs and expenses	77		198		275
Income from operations	78		193		271
Net income	71		181		252
Income from equity method investments	$	27	$	50	$	77


(1)	Financial information for the first quarter of 2019 has been retrospectively adjusted for the acquisition of ANDX. See Notes 1 and 3.

Summarized balance sheet information for MPLX’s equity method investments as of March 31, 2020 and December 31, 2019 is as follows:



	March 31, 2020
(In millions)	VIEs		Non-VIEs		Total
Current assets	$	320	$	325	$	645
Noncurrent assets	5,384		5,115		10,499
Current liabilities	153		195		348
Noncurrent liabilities	$	544	$	859	$	1,403



	December 31, 2019
(In millions)	VIEs		Non-VIEs		Total
Current assets	$	534	$	330	$	864
Noncurrent assets	5,862		5,134		10,996
Current liabilities	192		245		437
Noncurrent liabilities	$	305	$	822	$	1,127

As of March 31, 2020, the underlying net assets of MPLX’s investees in the G&P segment exceeded the carrying value of its equity method investments by approximately $60 million, after the impairment charges recognized during the quarter. At December 31, 2019, the carrying value of MPLX’s equity method investments in the G&P segment exceeded the underlying net assets of its investees by approximately $1.0 billion. As of March 31, 2020 and December 31, 2019, the carrying value of MPLX’s equity method investments in the L&S segment exceeded the underlying net assets of its investees by $330 million and $329 million, respectively. At March 31, 2020 and December 31, 2019, the G&P basis difference was being amortized into net income over the remaining estimated useful lives of the underlying assets, except for $31 million and $498 million of excess related to goodwill, respectively. At March 31, 2020 and December 31, 2019, the L&S basis difference was being amortized into net income over the remaining estimated useful lives of the underlying assets, except for $167 million of excess related to goodwill, respectively.