MPLX LP

NYSE:MPLX

Earnings Call Analysis

MPLX Reports Strong Growth in Q4 2023

In Q4 2023, MPLX recorded a noteworthy year with adjusted EBITDA growth of nearly 9% and a distributable cash flow (DCF) increase of over 7%, reaching annual totals of $6.3 billion and $5.3 billion respectively. The growth was driven by robust operational performance in both the Logistics and Storage (L&S) and Gathering and Processing (G&P) segments, with record throughputs in pipelines and terminals, particularly in the Marcellus and Permian basins. The capital discipline strategy led to a $270 million acquisition in the Delaware Basin and a planned capital expenditure of $1.1 billion for 2024 focused on high-potential basins. New gas processing plants are slated to come online in key regions by 2025. With a solid distribution coverage of 1.6x, MPLX increased its quarterly distributions by 10% annually for two consecutive years to $3.40 per unit and continued to return substantial capital to unitholders, totaling $3.3 billion in distributions.

A Record of Stable and Growing Returns

Driven by diligent cost management and strong operational performance, the company has successfully maintained a trajectory of growth, evidenced by a 9% increase in adjusted EBITDA and over 7% growth in distributable cash flow (DCF) over the past year. These results are reflected in metrics such as the full year adjusted EBITDA reaching $6.3 billion, distributable cash flow hitting $5.3 billion, and adjusted free cash flow standing at $4.1 billion, demonstrating the company's consistent ability to grow cash flows and support increased returns to shareholders through a boosted quarterly distribution now at $3.40 per unit annually. Moreover, this growth has been achieved while sustaining a strong distribution coverage of 1.6x .

Capitalizing on Strategic Asset Base and Demand

The company's strategic positioning in low-cost basins like the Marcellus and Permian has facilitated robust operational performances, with a standout in the Marcellus where processing utilization reached 96%. These operational achievements support continued volume growth and, consequently, confidence in long-term production outlooks. Efforts to optimize the asset portfolio are coupled with disciplined capital expenditure plans, with $1.1 billion projected for 2024, including $950 million for growth and $150 million for maintenance. This outlines a focus on organic growth, investments in joint ventures, and bolt-on opportunities that reinforce the company's competitive footing in natural gas and natural gas liquids (NGL) assets .

Robust Financial Position and Growth Ambition

The company boasts a strong balance sheet with a stability that supports a leverage ratio of 4x. Despite over $1 billion in notes maturing later this year, the company plans to use its financial flexibility, including a year-end cash balance of $1 billion and access to an intercompany facility, to optimize cost of debt rather than structurally lowering overall debt levels. This positions the company to further invest in growth projects and maintain its capital allocation strategies .

Continuing to Deliver Unitholder Value

On the backdrop of a mid-single-digit growth rate target over multiple years, the company remains committed to disciplined capital allocation, intended to spur consistent year-to-year growth. With a total unitholder return of 22% recently, underpinned by substantial annual adjusted EBITDA and DCF growth, the company has delineated a clear plan to advance high-return growth projects, particularly in the strategic Marcellus and Permian Basins. This, in turn, solidifies the promise to reinvest in the business and sustain capital returns to unitholders .

Earnings Call Transcript 2023-Q4

[Operator]

Welcome to the MPLX Fourth Quarter 2023 Earnings Call. My name is Sheila, and I will be your operator for today's call. [Operator Instructions]. Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian. Kristina, you may begin.

[Kristina Kazarian, executive]

Thank you. Good morning, and welcome to MPLX's Fourth Quarter 2023 Earnings Conference Call. The slides that accompany this call can be found on our website at mplx.com under the investor tab. Joining me on the call today are Mike Hennigan, Chairman and CEO; Chris Hagedorn, CFO. Also with us is John Quad as our CFO transition into their new roles and other members of the executive team. We invite you to read the safe harbor statements and non-GAAP disclaimer on Slide 2. It's a reminder that we will be making forward-looking statements during the call and during the question-and-answer session that follows. Actual results may differ materially from what we expect today. Factors that could cause actual results to differ are included there as well as in our filings with the SEC. With that, I'll turn the call over to Mike.

[Michael Hennigan, executive]

Thanks, Kristina. Good morning, everyone. Thank you for joining our call. I'd like to acknowledge Chris Hagedorn MPLX's new CFO joining our call. We look forward to Chris' financial leadership, having served in various roles in the midstream sector, previously being the controller of MPLX and most recently controller of MPC. 2023 was a strong year as we successfully executed our strategic priorities. Full year adjusted EBITDA was $6.3 billion, distributable cash flow was $5.3 billion and adjusted free cash flow was $4.1 billion. Our results reflect the continued growth of the partnership and its cash flows.In our L&S segment, strong operational performance and customer demand drove record pipeline throughput and strong growth in terminal throughput demonstrating the value of our relationship with MPC. In our G&P segment, we saw record throughput in our gathering, processing and fractionation operations driven mainly by our assets in the Marcellus and Permian Basins. Our focus on cost management, strong operational performance and growth from recent capital investments resulted in adjusted EBITDA growth of nearly 9% and DCF growth of over 7% for the year.In line with our commitment to return capital, the growth of MPLX's cash flow supported the return of $3.3 billion to unitholders through distributions. We've increased our quarterly distribution 10% each of the last 2 years, which now stands at $3.40 per unit on an annualized basis, and we still have strong distribution coverage of 1.6x. Turning to the macro, the United States continues to be a low-cost producer of energy fuels needed across the globe. Our expectations on the long-term production outlook in our key basins are unchanged. We expect strong demand for hydrocarbons will support growth across our asset footprint.In our largest base in the Marcellus, the cost to develop is at the low end of the cost curve and below current commodity prices. In the fourth quarter, process utilization reached 96%, and we expect producer drilling activity to support continued volume growth in the Marcellus. We've seen similar growth rates in the Utica, where processing utilization increased 10% year-over-year. Both basins are seeing wells with longer laterals, which are resulting in higher volumes, highlighting the strength and opportunities we see in our Northeast footprint. In the Permian Basin, crude prices remain attractive and associated gas production continues to grow as producers execute drilling and completion activities.As part of our Permian growth strategy, we acquired the remaining interest of a gathering and processing joint venture in the Delaware Basin for approximately $270 million at an attractive multiple. This acquisition illustrates our ability to grow the cash flow of the partnership through the lens of strict capital discipline. We're confident in our ability to grow the partnership and our focus on executing the strategic priorities of strict capital discipline, fostering a low-cost culture and optimizing our asset portfolio, all of which are foundational to the growth of MPLX' cash flows.Turning to our capital plans. Today, we announced the capital expenditure outlook of $1.1 billion for 2024. Our plan includes $950 million of growth capital and $150 million of maintenance capital. We remain committed to capital discipline and our 2024 growth capital outlook is anchored in the Marcellus and Permian Basins. Our integrated footprint in these basins have positioned the partnership with a steady source of opportunities to expand our value chains, particularly around natural gas and NGL assets. We plan to continue growing these operations through organic projects, investment in our Permian joint ventures and bolt-on opportunities. In the L&S segment, construction is progressing on the Whistler Agua Dulce to Corpus Christi or ADCC Natural Gas Pipeline, which is expected to be in service in the third quarter of 2024.We're also progressing the expansion of the BANGL joint venture NGL pipeline to approximately 200,000 barrels per day, which is expected to be completed in the first half of 2025. These projects are largely financed at the JV level. Therefore, our portion of the JV finance capital spending is not reflected in our capital outlook. In the G&P segment, we're bringing new gas processing plants online to meet increasing customer demand. In the Marcellus Basin, we advanced construction of the Harmon Creek 2 gas processing plant, which is expected to be online at the end of the first quarter.Similarly, in the Permian Basin, we progressed construction of Preakness 2, which is expected to be online early in the second quarter. Additionally, we are building our seventh gas processing plant in the basin secretaria, which is expected to be online in the second half of 2025. Once operational, our total processing capacity in the Delaware Basin will be approximately 1.4 billion cubic feet per day. Outside of these strategic basins, the remainder of our capital plan is mostly comprised of smaller, high-return investments targeted at expansion or debottlenecking of existing assets and projects related to expected increased producer activity. While our capital outlook is primarily focused on our L&S and GMP footprint, we will evaluate low-carbon opportunities to leverage technologies that are complementary with our asset footprint to create a competitive advantage.Moving to capital allocation. We're optimistic about our opportunities in 2024. First, maintenance capital. We are steadfast in our commitment to safely operate our assets, protect the health and safety of our employees and support the communities we operate in. Second, we're focused on delivering a secure distribution and expect this will remain our primary return of capital tool. Third, we'll invest to grow the business. This is both a return on and a return of capital business. And as we look at 2024, our priority is to invest to grow the business at superior returns. After these priorities, we'll assess the opportunistic return of capital to unitholders. Recent industry consolidation has not changed our perspective on the structure of MPLX. MPLX is a strategic investment for MPC and MPC does not plan to roll up the partnership.Now let me turn the call over to Kris to discuss our operational and financial results for the quarter.

[Carl Hagedorn, executive]

Thanks, Mike. Slide 7 outlines the fourth quarter operational and financial performance highlights for our Logistics and Storage segment. The L&S segment reported its fourth consecutive quarter of $1 billion adjusted EBITDA. Adjusted EBITDA increased $110 million when compared to the fourth quarter of 2022, primarily driven by higher rates and throughputs, including growth from equity affiliates. Crude pipeline volumes were up 4%, primarily because of refinery maintenance schedules in the prior year. Product pipeline volumes and terminal volumes were flat. Moving to our Gathering and Processing segment on Slide 8. The G&P segment adjusted EBITDA increased $59 million compared to fourth quarter 2022. This was driven by higher gathering and processing volumes. Total gathered volumes were up 1% year-over-year, primarily due to increased production in the Marcellus and the Southwest. Processing volumes were up 9% year-over-year, primarily from higher volumes in the Marcellus and the Utica driven by increased customer demand. Focusing in on the Marcellus, by far our largest basin of GMP operations, we saw year-over-year volume increases of 10% for gathering and 9% for processing, driven by increased drilling and production growth. Marcellus processing utilization reached 96% in the fourth quarter, illustrating the need for our Harmon Creek II facility. Fractionation volumes grew 1% due to higher processed volumes, which were offset by lower ethane recoveries.Moving to our fourth quarter financial highlights on Slide 9. Total adjusted EBITDA of $1.6 billion and distributable cash flow of $1.4 billion increased 12% and 9%, respectively from prior year. Turning to our balance sheet on Slide 10. Growth of our cash flows has continued to reduce MPLX leverage, which now stands at 3.3x. We believe the stability of our cash flow supports leverage in the range of 4x. And while MPLX has just over $1 billion of notes maturing later this year, we currently do not expect to structurally lower our debt. When evaluating the short-term maturity, we will consider all opportunities available to us to optimize our cost of debt. MPLX's strong balance sheet, including a year-end cash balance of $1 billion, plus the ability to utilize the intercompany facility with MPC provides us with financial flexibility to invest in the business and optimize capital allocation.Now let me hand it back to Mike for some final thoughts.

[Michael Hennigan, executive]

Thanks, Kris. In closing, MPLX has a strong history of growing the partnership's cash flows by executing strategic priorities, all while maintaining strict capital discipline. We continue to aim for mid-single-digit growth rate over multiple year periods. It's what we believe is appropriate to aim for, given our commitment to capital discipline and the size of our partnership within our capital allocation framework, but this should not be interpreted as annual guidance. And as you can see in our results, we've achieved this growth in adjusted EBITDA and DCF.By deploying capital wisely, controlling our costs and optimizing operations to get the most out of our assets, we have grown DCF by 7.1% on a 4-year compound annual basis. Our growth tends to come in stair steps as we develop and bring projects online and this disciplined approach to growing cash flows creates financial flexibility and underpins our commitment to returning capital to unitholders. We've increased our quarterly distribution 10% each of the last 2 years, and the business continues to generate free cash flow after distributions of over $800 million annually. So we believe we are in a strong position to continue to consistently grow our distributions.MPLX is a strategic investment for MPC. And as MPLX pursues its growth opportunities, the value of this strategic relationship will be enhanced. We're confident in our growth opportunities and ability to generate strong cash flows. In 2023, we saw total unitholder return of 22%, underpinned by annual adjusted EBITDA growth of nearly 9% and DCF growth of 7%. In fact, we have grown EBITDA by nearly $1.2 billion over the last 4 years and have over 7% DCF growth CAGR over the same time frame. By advancing our high-return growth projects anchored in the Marcellus and Permian Basins, along with our focus on cost and portfolio optimization, we intend to grow our cash flows, allowing us to reinvest in the business and continue to return capital to unitholders. Now let me turn the call back over to Kristina.

[Kristina Kazarian, executive]

Thanks, Mike. As we open the call for questions, we ask that you limit yourself to one question plus a follow-up. We may re-prompt for additional questions as time for it. With that, we'll now open the call to questions.

[Operator]

We will now begin the question-and-answer session. [Operator Instructions]. Our first question will come from John Mackay with Goldman Sachs.

[John Mackay, analyst]

I just wanted to start on the quarter. I mean it was pretty strong across the board versus where we were. Just wondering were there any kind of one-offs in the quarter? Or is this a kind of healthy enough run rate that we can think of MPLX growing off of from here?

[Michael Hennigan, executive]

Yes, John, I would say we really did not have any significant one-offs up or down. You'll notice in our adjusted EBITDA, we did have insurance proceeds, but those were adjusted out. So really nothing significant to point to.

[John Mackay, analyst]

Just on the CapEx guidance, slightly higher than last couple of years, acknowledging it's only $100 million. But is that any shift that you're seeing in opportunities? Or is that kind of maybe a change in willingness to spend? Maybe you could just kind of frame up how you got to the ‘24 budget versus maybe '23?

[Michael Hennigan, executive]

John, this is Mike. It's a good question. So as you know, we're a service provider, and at the end of the day, we react to the producer needs, especially on the G&P side of the business. And as I said in the prepared remarks, sometimes it can be a step change. We do have a couple of plants coming on, Harbin Creek II, Preakness 2, we got Secretaria coming next year. So we have a little bit of a growth spurt in processing plant construction. So that's part of it. But the main reason, though, that we've been spending this, I'll say, roughly around $1 billion a year is we have a large enough footprint that we believe over time that we can generate better than normal returns and continue to grow.And as I said in my prepared remarks, one of the things we're proud of is, we've grown DCF about 7% consistently over the last 4 years. And a lot of that has to do with the term we use is strict capital discipline, continuing to really look for better return projects. I know for you guys a lot of times, it doesn't come off as big announcements. But hopefully, the results show you that we're getting good deployment of capital, getting good returns. And like I said, we're kind of proud of 7% growth for the size of our partnership over a 4-year CAGR, hopefully speaks for itself.

[Operator]

Our next question comes from Brian Reynolds with UBS.

[Brian Reynolds, analyst]

Maybe to start off on the operations in the multiyear mid-single-digit earnings growth cadence. While understanding this is not ‘24 earnings guidance, just kind of curious if you can unpack some of the main drivers for earnings growth in '24 relative to '23. It seems like Marathon throughput volume should be up year-over-year even with some of the 1Q turnaround activity. But curious if you could maybe unpack some of the other drivers of the base business for the year.

[Michael Hennigan, executive]

Yes, I think similar to the way John was asking the question is the way we look at this is we obviously have a multiyear lens that we're looking at stuff and we're trying to figure out where is the best way to deploy capital. I keep having this funny conversation about. It's not guidance, but I'm kind of telling you that we're looking to make sure that we can grow our cash flows consistently year-on-year -- as I just said, it's been 7% for 4 years in a row. So we look at the plan. The team is constantly looking at organic growth. We haven't done a lot of M&A, but as you saw, we just recently bought out a JV partner and Dave and his team are constantly looking at assets to help the portfolio.So we kind of look at all of that together and kind of look out over a couple of years and say, do we fulfill our goals of continuing to grow the cash flows because we want to keep moving that distribution up? We've shown you 10% the last couple of years. At the end of the day, our lens tends to look out further compared to what you see, but hopefully, you're seeing it in the results. And let me let Dave make a couple of comments on the market in general.

[David Heppner, executive]

So as we think about M&A and growth, one thing I want to make clear is growth through M&A for us isn't just back to buying assets. We look to pursue opportunities, number one, high-quality assets; number two, align with our long-term strategies. And number three, allow us to -- I'll use the word bolt-on or capture synergies and integration value along our value chains, whether it be crude, nat gas or NGL. So, with all that said, that's kind of how we look at it. And the overwriting Mike touched on it, we continue to touch on it through the lens of strict capital discipline or acceptable risk-adjusted returns. So as we've looked through a lot of the opportunities out there and there is a lot of activity, it really gets back to -- we feel we have a lot of high-return organic projects to utilize our capital versus some step-out M&A opportunities that we've evaluated up to this point.

[Brian Reynolds, analyst]

And I guess, maybe through the broader context of organic growth and potentially strategic bolt-on M&A as you alluded to in the prepared remarks. Do you have an updated view on maybe the Corpus market in BANGL. Clearly, it stands for Mont Belvieu alternative. So kind of curious if there's other opportunities maybe downstream, either further gas or maybe some frac downstreams outside of Mont Belvieu that you'd be interested in growing into over-time.

[David Heppner, executive]

As we just talked about here, we're very public about our plans to expand all of our value chains. And I'll touch on NGL, specifically the BANGL expansion all the way down to the markets. And as whether we're going to extend these value chains either independently or via partners as we have with our JV partners out there, the strategy is really getting all the way down to the water and having export optionality.So as you might have heard, in mid-December, MPLX submitted an air permit application for NGL fractionation storage down in the Texas City market. So that filing, as you would expect, is a step we take as any project manager evaluate optionality and through the project development to submit those permits. So that kind of gives you a view of how we're thinking about it. But also, it doesn't imply that the project has received FID approval, and we're proceeding with it, and we'll continue to evaluate all options as we achieve that value chain build-out, ensure that we're getting the highest and most acceptable rate of return on those investments. So hopefully, that gives you a little more color on the NGL fractionation side of it. Maybe I'll turn it over to Shawn to talk a little bit about the BANGL side.

[Shawn Lyon, executive]

As Dave mentioned, I'll speak to a little bit to the BANGL pipeline there. If you look at BANGL itself, it's really the strength of the partnership that ties the acreage into it. We've got an integrated play, as Dave and Mike have mentioned with the GMP gas plants plus other partners that are in it. So we feel really good about the partnership of BANGL that is driving the demand. The other part that we really are pleased with is the capital discipline and the capital efficiency of the BANGL project over time. Last year, we announced the 200,000 barrels per day expansion. Again, as the volume comes on, we're ready to expand and continue down that path. So we feel good about positioning the pipeline to set up for some of the opportunities that Dave talked about.

[Operator]

Our next question will come from Theresa Chen with Barclays.

[Theresa Chen, analyst]

A quick follow-up related to the BANGL commentary, if I may. Can you just help us walk through the economics behind the expansion? And given there seems to be quite a bit of Permian NGL capacity coming online between multiple projects, including yours, how do you view the evolution of rates over the next few years? Or are you not really susceptible given the integrated strategy?

[Shawn Lyon, executive]

I think there's been a lot of discussion about that. I'll just really speak to, again, our view of BANGL of how, again, it's really 2 things, the strength of the partners that really are driving the volume on BANGL and then also the capital efficiency. And we really feel we're positioned to be really competitive in that market. So we feel really good about that. Again, bringing on the expansion as the volume is there. We know it's there. We've got the integrated win-win or value with our G&P business and other partners that are attached to BANGL. So we feel good about all those things that is driving it.

[Michael Hennigan, executive]

I can't give you a lot of detail on the economics, but the capacity is there, so the capital investment is relatively low. We're adding horsepower as an example. So this is an example of one of those projects where the amount of capital deployed is relatively low, and as Shawn mentioned, we have dedication, we know volumes are going to come. So it fits into what we call the higher return bucket compared to other type of investments. I hope that helps a little bit.

[Theresa Chen, analyst]

And then maybe turning to the residue side. So after Marathon begin service this year, there's still a visible need for additional long-haul egress out of the basin, right? And thus far, none of the projects under development has moved forward. When do you see residue takeaway becoming a problem for the basin? And given your interest in Whistler or Marathon, what do you view MPLX's role and the incremental build-out of Permian residue capacity?

[David Heppner, executive]

So I'll tackle that one. So you touched on a lot of it and Shawn, and as you know, we're participating in those long-haul pipes, whether it be Whistler that came on originally and 3Q 2021 and then the expansion in September 2023, whether be Marathon, which will be coming on in 3Q 2024 and subsequently ADCC, which is coming on at the same time frame. So all those are supporting or participate in the long-haul pipes in that value chain from basin down to the Gulf Coast. So as we look forward, number one, we continue to see strong production forecast out of the Permian, which will continue to allow us to evaluate and analyze expansion projects or new projects going forward. With all that said, maybe back to your question, based on our current forecast, we would expect to see after our projects come online that I referenced, probably around the late ‘26, early '27 time frame, additional long-haul expansion capacity is going to be needed based on those forecasts. Hopefully, that helps a little bit.

[Michael Hennigan, executive]

I just wanted to add, aside from the Permian, I think the market is underappreciating the growth potential up in the Marcellus. It's been talked about being in maintenance mode for some amount of time. But if you look recently, there's starting to be a growth spurt occurring up in that area as well. And I think if people look at it over time, eventually MVP will come online, and it's going to unlock some more growth. And I think that's another area that probably hasn't been appreciated as much. But if you look over even just the last year or the last couple of quarters, in our results, in general, the processing volumes have really kicked up compared to where they've been recently.So aside from the Permian growth, which gets a lot of attention, I think the Marcellus and also Utica, again, Utica was an area that probably was a little less thought of recently, but it's also starting to go into a growth mode as well. I'll let Greg give a couple of comments on that because I don't want people to miss that thought.

[Gregory Floerke, executive]

In terms of the volume that we process a little over 6 billion cubic feet a day, which is nearly 6% of the U.S. total gas of the 9.5% that we process in total is in the Marcellus. And that drove our utilization of our processing plant fleet up to 96%, which is a new record for us. All of that process gas generated a lot of C3+ liquids in particular. So that drove our fractionation utilization up to 82% and growing. We have a unique integrated system in the Northeast that's totally different than what we have in the Southwest and that we have to fractionate our own liquids and then find outlets. Fortunately, we have outlets to the East Coast for export, and as well as into the Midwest for our cornerstone pipeline, and we have access for gasoline into Canada as well as butane into the Midwest.So we have a really good position there, and Harmon Creek 2 coming online is much needed at the utilization point we're at now. We've also, as Mike mentioned, brought our Utica utilization up to 49% and growing after a period of time where there wasn't growth, and we see a lot of good tailwinds with new producers moving in the Utica and new state land auctions coming up expected this year. And we have existing capacity, not only the processing plants, but fractionation and liquid and gas pipelines to fill. So that's leveraging those existing assets and without a lot of new capital is a big focus for us.

[Operator]

Our next question will come from Jeremy Tonet with JPMorgan.

[Jeremy Tonet, analyst]

Just wanted to touch base on the acquisition a little bit more, if I could. If you're able to share a bit more color on the JV interest acquired, are these existing assets in the Permian or assets, otherwise that can be relocated to the Permian? And I guess, just thoughts on the type of synergies that could be captured here, what that could mean for economics?

[Michael Hennigan, executive]

Yes, Jeremy, I'll start. So this particular situation, $270 million to buy out our partner. Obviously, we were the operator of the assets, so we're very familiar with the operations. We know what volumes and contractual dedications we have to it. We said it was an attractive multiple. It was a little under 7%, just to give you a flavor as to where the economics of that were. So these are things that Dave and his team are always talking to our partners about if there's an opportunity where somebody is willing to get out for their reasons, and we see it as a good opportunity for us. That's how these transact. We go into these types of things, just looking to be a good partner with all of our JV partners. But there are times when like in this case, the partner wanted to exit at a time when we thought it was a good opportunity. So that's how those kind of play themselves out. We don't count on them. But when those conversations come up, we're certainly willing to look at it.And then in general, as you know, in this space, we have quite a bit of JVs across our footprint. So most of the time, we're just trying to work with our partners on how to grow the interest so that both of us or 3 of us or however many partners are in it, are all getting a win. And that's kind of the way we look at it from the partnership standpoint. And then aside from that, our teams are looking, how do we bolt on, where can we do a little bit of capital, organic capital investments such that we can add to it, whether it's a JV asset or just one of our own assets. So it's kind of like what I said at the beginning. We're kind of looking out throughout the year. We're looking at where can we bolt on, where can we add stuff? Bolt-on isn't sexy when it comes to the earnings calls, but it's really good returns. So there are say some projects we really like.

[Jeremy Tonet, analyst]

And just to clarify, are these assets currently in the Permian? Or could they be relocated to the Permian? Just want to make sure it's clear there.

[Michael Hennigan, executive]

No, they're in the Permian today. They're in the Delaware.

[Jeremy Tonet, analyst]

And as far as M&A, a lot has been talked about today, but it sounds like you're saying these bolt-ons are more likely than anything larger in nature is how we should generally think about potential M&A activity?

[Michael Hennigan, executive]

Yes. Jeremy, it's a balance. Obviously, if you're going to get involved in M&A and to a large extent, if you get into bigger, the returns are going to be much more competitive because a lot of people are going to be involved in that process. The ones that we like better as long as they continue to be there for us is where we can just organically invest and get a much higher return than the M&A market will typically give you. And as long as we continue to have those, that's when we announce our total capital, a large majority of it, we don't talk about on earnings calls and press releases or things like that because they're smaller projects, but they're much higher returns.So we tend to favor those just because of the return that they give us. And that's why some people keep scratching our head a little bit of how you guys grow in the partnership, 7% CAGR over 4 years. And a lot of it has to do with self-help things that we're doing internally, these bolt-ons that we're doing and then occasionally adding stuff that meets earnings call discussions, et cetera. So it's a combination of all those, but what I hope investors are realizing is we're sitting here behind the scenes looking at it over multiple years and seeing that we think we can continue to grow the partnership we have in the back of our head, what that means for how we're going to return capital. Obviously, it starts with you got to get a return on that capital, and then we think about what's the best way to return it. And that's kind of the internal discussions that we're having all the time.

[Operator]

Next, we will hear from Keith Stanley with Wolfe Research.

[Keith Stanley, analyst]

Wanted to follow up on some of the good growth that you saw in the Marcellus and Utica in Q4 and through last year and some of the positive commentary on 2024. Would you say your integrated footprint across Appalachia is allowing you to take market share over time in that market, and that's part of why you're able to see a little better growth? Or do you see the basin kind of inflecting positively with MVP and you're just kind of maintaining your market share overall?

[Gregory Floerke, executive]

I would say it's some of both. We have the most extensive integrated footprint in the basin, both across the Utica and the Marcellus. They're interconnected. We have access to multiple fractionation facilities. We have a distributed de-ethanization plant. So we have a lot of flexibility there. It's just good rock, the Utica and the Marcellus basins in terms of uniformity are really good. And I think there's some combination of existing producers that are drilling longer laterals that are driving more production per pad and then there are. The Utica is a good example of some new producers moving into the region and taking advantage of particularly the light oil and condensate window over there, which brings associated gas and NGLs as well. So really a combination of both our scale and integration as well as new production, new producers.

[Keith Stanley, analyst]

Second question, I guess, just on the growth outlook, and Mike, you've talked about this a lot already, but the company is investing $1 billion a year of capital if we're in a world without kind of inflation escalators anymore and assume kind of flattish commodity prices, is $1 billion a year of capital enough to hit your growth targets? Or do you need to continue to find self-help type mechanisms, whether it's cost and efficiency improvements, tuck-in M&A, et cetera, in order to hit the growth target. So is it $1 billion enough per year? Or do you need to find other things to get there as well?

[Michael Hennigan, executive]

Yes, it's a combination. So what I was saying, if you look at the history, we've been spending around $1 billion even slightly under the last couple of years. And recall that number also includes that $150 million-ish of maintenance. So we take a look at our portfolio, and we try to examine where do we think we have opportunities? And it's really what I was saying to Jeremy's question, it's a combination of all of it. But I think if you look at the results, 7% over 4 years, we're about a $6 billion EBITDA business. So you're looking roughly at about $400 million a year of growth at that 7%. So we look at what we have on paper, and we try and think about how do we get to those kind of levels? That’s why I kind of just generically call it mid-single digit just as a generic number. But we're really thinking for our size of partnership that if we can continue to grow 30, 40, 500 million, those kind of numbers, we think is sufficient to keep what we think is a very steady growth in return of capital, which we think the market would like. So we look at all of it. We look at our self-help, we look at efficiencies, and we look at different things that are occurring as far as capital. But up until this point, that's about the level that we've needed to spend to be in that range.To your point, if we thought at times we need to deploy more capital, that's something that we would have at our hand at our toolbox, so to speak. So we look at it all, we try and figure out our plan. I know it's probably frustrating for your side of the fence because you don't get to see the multiyear. But that's what we're trying to do. And it's all to try and show that the market that we're going to continue to grow the cash flows, we're going to continue to increase the distribution. We're going to continue to return capital. And hopefully, that is a good day for investors. Last year, we talked about total unitholder return of 22%. We're pretty proud of that. And hopefully, investors have found that to be a good outcome.

[Operator]

Our next question comes from Michael Blum with Wells Fargo.

[Michael Blum, analyst]

I wanted to ask, there's been a lot of M&A consolidation in the upstream space. And I'm wondering if that's had any impact on you either directly or indirectly, some of your producer customers maybe are involved in some of those. And just curious if there's positive or negative or maybe no impact, but just curious if that's had any impact on you guys.

[Gregory Floerke, executive]

I would say that there really has been no impact or at least no material impact. There is consolidation, but for the most part, we have agreements with one party or the other and in some cases, long-standing agreements. Yes, the answer would be really no impact there.

[Michael Hennigan, executive]

Yes, Michael, similarly on the crude side, there hasn't been anything that we could say directly correlates to that. Obviously, we gather in a lot of basins and whether it's a single producer or a consolidated producer, it's really the area and the dedications that come with that, that really impacted as opposed to who the owner is.

[Shawn Lyon, executive]

And I might add with one of the recent consolidation activities we saw, we actually did see an uptick in credit profile. So that was actually helpful to us as we thought about our credit profile.

[Michael Blum, analyst]

And then I know this has been asked in prior calls, but you're sitting there with $1 billion of cash on the balance sheet. You didn't do any buybacks in Q4. It sounds like you're going to maintain the same level of debt. So it's not going to go away. So just maybe just some comments on how you're thinking about maintaining that level of cash and what type of financial flexibility that will give you?

[Michael Hennigan, executive]

I think you hit it on the head with your last comment, Michael, gives us flexibility. As we started into the year, as I said, we always have a plan in place, but we had a pretty strong year. We had record throughputs in the L&S side of the business as well as the G&P side of the business. EBITDA turned out to be 9% year-on-year growth. So it falls into the category of a good problem to have. Like you said, at the end of the day, we spent a little bit of money on the acquisition that we talked about. We deployed capital. And I made the statement that the last couple of years, we've been generating roughly about $800 million beyond our commitment. So it's been a good problem to have. I know people are wondering what our plan there is. And short term, it's just having that flexibility. We haven't done a lot of buybacks. We've told the market that are on the side of distributing through increasing the distribution, which we've done a couple of years in a row.We still think that's our primary tool is the term that we've used. We've talked on previous calls about volatility in the equity price. It's been a factor in some of our decisions. But at the end of the day, it does give us a little bit of flexibility. And hopefully, over time, you'll get to see how we deploy it.

[Operator]

And our final question for today will come from Neal Dingmann with Truist.

[Neal Dingmann, analyst]

My question is on the Permian that you've talked a bit about specifically seen a little bit, I guess, year-to-date on some weather weakness just in some areas. I'm wondering maybe how had an impact there, and then secondly, it sounds like, and I just want to double check your longer term, you've got a lot of attractive projects such as our plans such as Wink-to-Webster and others, are those still right on plan.

[Michael Hennigan, executive]

To your first question, Neil, obviously, there's always weather issues that occur every year, but nothing significant compared to what we've seen in the last years. But certainly, it's the type of thing that we battle at this time of the year in general, but I wouldn't say there's anything major that we needed to discuss.

[Shawn Lyon, executive]

Regarding your question regarding Wink-to-Webster, we continue, we pleased with the ramp-up and the volume we've seen come across Wink-to-Webster in '23. And likewise, in '24, we expect to see a little bit of increase going forward. So really pleased with that investment in that JV partnership going forward in '24 and beyond.

[Neal Dingmann, analyst]

And then just secondly, you guys touched already on the Utica, but I'm just wondering, it looks like you're spending a bit more on the Utica gatherer. I'm just wondering, is it perceived growth there? What's driving this project?

[Gregory Floerke, executive]

It is perceived growth, we've already seen growth in the Utica. We're filling up existing processing capacity, liquid capacity and transmission and compression. But there is always going to be in areas where we gather additional capital to connect new well pads, which is a sign of growth from multiple producers. So yes, that is a sign of more growth, and we're excited to see it.

[Kristina Kazarian, executive]

Well, thank you for joining us today, and thank you for your interest in MPLX. Should you have additional questions or would you like clarification on any of the topics discussed today, members of the IR team will be available to take your calls.

[Operator]

Thank you. That does conclude today's conference. Thank you for participating. You may disconnect at this time.