Marathon Petroleum combines midstream operations for US$9B

Marathon headquarters in Findlay, Ohio. Image: Marathon

Marathon Petroleum Corporation is merging two of its oil and gas pipeline, transportation and storage operations for $9 billion.

MPLX and Andeavor Logistics are both master limited partnerships majority owned by Marathon, which raised the possibility that it might combine the two late last year.

Andeavor unitholders will receive 1.135 MPLX common units for each Andeavor common unit held. Marathon will receive 1.0328 MPLX common units for each Andeavor common unit held.

The enterprise value of the deal is listed at $14 billion.

“The combined entity will have an expanded geographic footprint, which we believe enhances our long-term growth opportunities and the sustainable cash flow profile of the business. We are confident about the midstream growth and value-creation opportunities that exist across this combined platform in the best basins in the U.S.,” Marathon chairman and chief executive officer Gary Heminger said in a statement.

Low oil prices are helping to push consolidation efforts along in the energy sector. Aside from Marathon’s actions, Anadarko Petroleum Corporation has been the subject of a bidding war between Chevron Corporation and Occidental Petroleum Corporatin. Anadarko announced Monday that it plans to end its $33 billion takeover deal with Chevron in favour of a revised bid by Occidental.

Andeavor, formerly known as Tesoro, has refineries in California, Minnesota, New Mexico, North Dakota, Texas, Utah, Washington and Alaska. The companies are all based in Findlay, Ohio.

The deal is targeted to close in the second half of the year.

© 2019 The Canadian Press

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