Andeavor Logistics LP (ANDX) Q1 2019 Earnings Call Transcript

Andeavor Logistics LP (ANDX)
Q1 2019 Earnings Call
May. 08, 2019, 1:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the MPLX first-quarter 2019 earnings call. My name is Jacqueline, and I will be your operator for today's call. [Operator instructions] Please note that this conference is being recorded. And I would now like to turn the call over to Kristina Kazarian.

Kristina, you may begin.

Kristina Kazarian -- Vice President, Investor Relations

Welcome to today's webcast and conference call. We are very pleased to be announcing MPLX agreement to acquire Andeavor Logistics this morning. Given our cancellation of MPLX's earnings call, we will also be providing some highlights on the first quarter. The synchronised slides that accompany this call can be found on mplx.com under the investors tab or on andeavorlogistics.com under the investor tab.

On the call today or Gary Heminger, chairman and CEO of Marathon Petroleum MPLX and Andeavor Logistics, Mike Hennigan, president of MPLX, Pam Beall, CFO of MPLX, as well as other members of both the MPLX and ANDX executive teams. 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. Slide 3 contains additional information related to the proposed transactions. Investors and security holders are encouraged to read the registration statements, which will include a consent statement and prospectus to be filed with the SEC, as well as other relevant documents filed with the SEC. Now, I will turn the call over to Gary Heminger.

Gary Heminger -- Chairman and Chief Executive Officer

Thanks, Kristina. Good morning to everyone. If you please turn to Slide 4. We are very pleased to announce the successful conclusion of our evaluation to combine our two MLPs.

This morning MPLX announced an agreement to acquire Andeavor Logistics in a unit-per-unit exchange. MPLX's acquisition of ANDX simplifies our MLPs into a single listed entity and creates a leading large scale diversified midstream company anchored by fee-based cash flows with an expanded geographic footprint, and enhanced long term growth opportunities. Slide 4 provides the highlights of the transaction. Under the terms of the merger agreement, MPLX intends to acquire ANDX in a unit-per-unit transaction at a blended exchange ratio of 1:07.

This represents a roughly 1% premium to market with an equity value of approximately $9 billion, and an enterprise value of $14 billion for the acquired entity. The transaction is expected to be immediately accretive to MPLX unit holders on projected distributable cash flow, and provides an approximately 7% premium to ANDX public unit holders. Using the guidance from investor day, MPLX's pro forma adjusted EBITDA would be approximately $5.3 billion and distributable cash flow would be roughly $4.1 billion in 2019. These levels would support an impressive distribution coverage of approximately one-point-four times, a leverage ratio over approximately four times, and an enhanced credit profile.

The transaction has been unanimously unanimously -- approved by MPLX's and ANDX's respective conflicts committees, and both boards of directors. As part of the transaction, MPC which represents approximately 64% of the ANDX's common units has entered into a parental support agreement with the transaction. We anticipate the transaction will close in the second half of 2019. On Slide 5 you can see the simplification that will result from the combination.

Both entities have a similar business mix with roughly 60% logistics and storage assets, and roughly 40% gathering and processing assets. On a go-forward basis we expect the combined company will have two segments. As shown on Slide 6, the evolution of MPLX has been impressive. We began as an MLP in 2012, and since then we have pursued a number of strategic steps focused on value creation.

We have significantly expanded both our footprint and our longer term structural ability to create market trends -- to capture market trends. Through the elimination of the IDRs, we streamlined the structure, improved our cost of capital, and enhanced our overall ability to be competitive among our peers. Today marks another significant milestone. Once this combination is complete, we will have created one of the best positioned mystery platforms in the industry for long term value creation.

Now, I will turn the call over to Mike Hennigan to expand on the strategic vision that will carry our partnership forward. Mike will remain as president of MPLX, and lead all the midstream initiatives. Mike?

Mike Hennigan -- President, MPLX

Thanks, Gary. We've been very eager to move forward this combination since MPC's acquisition of Andeavor, and are enthusiastic about the opportunities it brings to the partnership. This merger fosters a more powerful presence in key producing regions and enhances our commercial opportunities to capture market trends. Turning to slide 7.

Let me remind you of the strategic priorities we outlined at investor day. Key tenant of our strategy is capturing the full midstream value chain by connecting growing crude NGL and natural gas production to the global market. To accomplish this we will continue to prioritize long-haul pipelines and export infrastructure, which will provide enhanced long term cash flow stability. These projects benefit from our ability to leverage existing assets.

We expect the Permian basin to be a source of long term growth for our expanded midstream business, and expect to be an active player in providing logistics solutions in the basin. We will continue to leverage the relationship with MPC to enhance projects through buying commitments and providing efficient and value added logistics solutions for MPC's nationwide platform. We continue to believe in the Marcellus is an attractive growth opportunity and pursuing disciplined just-in-time investments to support our producer customers in the region. We believe that the Northeast has the lowest cost structure for a pure play natural gas production in the U.S., which provides additional opportunities for processing investments.

We have seen consistent volume growth in our Northeast footprint and expect this trend to continue. As we deploy capital, we're focused on financial discipline including maintaining our investment grade credit profile, targeting mid-teens returns on our growth investments, and maintaining a self-funding strategy for the equity portion of our capital investment. Moving to Slide 8. We are especially enthusiastic about the combined presence in the Permian basin.

A powerful combination of gathering, processing, and long-haul pipeline infrastructure and services across the hydrocarbon value chain including crude, natural gas, and NGLs. This combination strengthens our ability to participate in integrated downstream projects with a number of key partners. We have a number of organic projects in development that have strategic rationale to bring third-party revenues into the enterprise, and or create a synergy with MPC. On Slide 9, we highlight our gathering and processing opportunities in the Permian.

We are excited to add the cone and crude oil gathering system to our Permian footprint, which will supply two key crude pipelines under development, Gray Oak and Wink-to-Webster. ANDX's content system currently has 250,000 barrels per day of capacity and is expandable up to 500,000 barrels per day. On the natural gas side, we're developing a super system very similar to what we have up in the Northeast. We have two plants currently running, Argo and Hidalgo, and have three additional processing plants in various stages of development, including the Tornado plant which is targeted for completion in the third quarter of this year.

The combined water footprint will allow us to build on existing producer relationships, and capture expanded commercial opportunities. As shown on Slide 10, we have signed an LOI to a partner in the announced Exxon-Plains-Lotus-Wink-to-Webster project. As we've discussed before, we were previously evaluating the PGC pipeline project. Although we had sufficient commitments to proceed with PGC, we decided to join the larger Wink-to-Webster project as a way of delevering -- I'm sorry, as a way of delivering capital efficiency, and the opportunity to achieve a much higher return on invested capital.

Pipeline plans to have origination points in Wink and Midland Texas with a capacity of approximately 1.5 million barrels per day. Pipeline plants set destination points in the Houston market including MPC's Galveston Bay refinery in Texas City. Our expectation is that we will have an approximate 15% equity in the project, which is targeted to be in service in the first half of 2021. On Slide 11, we highlight our planned natural gas and NGL pipelines in the Permian.

The natural gas takeaway project is called Whistler pipeline. The 42-inch two billion cubic feet per day pipeline that would transport natural gas from Waha to [Inaudible]. The NGL pipeline is called BANGL which stands for Bellevue Alternative for NGLs. We plan to move NGL from the Permian basin to the Sweeney area where fractionation will occur, that thing will be consumed in a local area as a start, propane will be exported and the butanes and gasolines will be optimized or exported.

BANGL has a planned initial capacity of approximately 500,000 barrels per day and is expected to be operational in the early 2021. We've made significant progress on both Whistler and BANGL since originally announcing them last year. We are finalizing documentation with counter parties, and expect to announce a final investment decision in the very near future. On Slide 12, we have five export facilities operational or under development along the Gulf Coast to provide the ability to meet global demand for U.S.

production, and enhance our ability to generate third party revenue. We are enthusiastic about the prospects for the South Texas Gateway terminal, which will provide crude export opportunities for shippers on Gray Oak and other pipelines. Additionally, MPLX completed an open season on the reversal of the capitalized pipeline which is partially owned by MPC. We're very happy to report that we've received significant shipper interest for both light and heavy crude providing the opportunity to move forward with plants to start light oil deliveries in September of 2020, and heavy oil deliveries in 2022.

This project will allow Cushing supply to reach the Eastern Gulf and open the ability to export crude via Louisiana Offshore Oil Port commonly referred to as Lou. To conclude, we remain intensely focused on investing in high return projects while maintaining financial discipline. Partnering on the various Permian pipelines we discussed, demonstrates our capital-efficient approach to investing. By consolidating the investment program of both partnerships, we will have the opportunity to be more selective with our investments.

Let me now turn the call over to Pam to cover some of MPLX first-quarter highlights.

Pam Beall -- Chief Financial Officer, MPLX

Thanks, Mike. Turning to our financial highlights on Slide 14, we reported adjusted EBITDA of $930 million for the quarter, a 22% increase over the first quarter of 2018. The logistics and storage segment reported $559 million or 60% of our total adjusted EBITDA while gathering and processing, contributed $371 million in adjusted EBITDA. Distributable cash flow of $757 million also increased 22%, and we returned approximately $543 million to our common and preferred unit holders.

The bridge on Slide 15 shows the change in adjusted EBITDA from the first quarter of 2018 to the first quarter of 2019. Since the prior-year quarter, we increased adjusted EBITDA by $170 million dollars. The dropdown from MPC completed on February 1st of last year, generated an increase in adjusted EBITDA of $69 million. Organic growth in the logistics and storage segment contributed $53 million, an increase of 12%.

This growth was driven primarily by higher volumes on the Ozark and Wood River to Patoka crude pipeline systems, higher product throughput and EBITDA from other recently completed investments. The gathering and processing segment contributed $48 million in EBITDA from organic growth. This increase was driven by strong year-over-year volume growth across all services, and especially in the Northeast. Total gathered volumes increased 19% over the first quarter of 2018.

Total processed volumes increased 18%. In the Northeast, we experienced significant volume growth at our Sherwood and Harmon Creek complexes, which both had new plants placed in service in the fourth quarter. In the Southwest, we also experienced significant increase in volumes at our Argo plant in the Delaware basin. Fractionated volumes increased 17% over the first quarter of last year supported by expanded capacity.

Also completed in the fourth quarter of last year. Strong growth in volumes we experienced for the first quarter was partially offset by lower product margins as a result of lower NGL prices. Just as a reminder, every $0.4, $0.5 change to the NGL basket is approximately $23 million a year impact. Slide 16 provides a summary of key financial highlights and select balance sheet information.

We ended the quarter with approximately $2.9 billion of liquidity including $1.8 billion available on our bank revolver, and $1 billion available on the inter-company facility with MPC. With strong growth in distributable cash flow and distribution coverage at one point four one times. We expect to find the equity portion of our capital investments with retained cash from operations, and see no need to issue public equity. We ended the quarter with a leverage ratio of three-point-nine times, and are comfortable with leverage of approximately four times that supports an investment grade credit profile.

MPLX has a strong track record of returning capital to unit holders, and last week we declared a distribution of $0.6575 per common unit. That's a penny of increase, and we expect to maintain the distribution growth of $0.01 per quarter for 2019. And I'll turn the call back over to Kristina for Q and A.

Kristina Kazarian -- Vice President, Investor Relations

Thanks, Pam. [Operator instructions] With that we will now open the call to questions.

Questions & Answers:

Operator

Thank you. We will now begin the question and answer session. [Operator instructions]

Kristina Kazarian -- Vice President, Investor Relations

Operator and first question please.

Operator

Our first question comes from Jeremy Tonet from J.P. Morgan. Your line is open.

Jeremy Tonet -- J.P. Morgan -- Analyst

And thinking about the combined entity going forward, if you could talk a bit more about how you focus across the different basins that you have exposure to. There's a lot of different basins you're exposed to, and just wondering where you'd focus your growth initiatives across these basins, and some of the ones that have no growth or could be declining with -- could those possibly be divested.

Gary Heminger -- Chairman and Chief Executive Officer

Hey, Jeremy unfortunately you didn't. You did not come into the -- over the microphone right at the beginning. Could you start and repeat your question?

Jeremy Tonet -- J.P. Morgan -- Analyst

Sure. So I just want to touch base on the combined entity. You have exposure to a lot of different basins and wanted to see where you'd focus your growth initiatives across those different assets and if there's certain assets in the portfolio that aren't growing or could be shrinking. Could those be candidates for divestiture?

Mike Hennigan -- President, MPLX

So Jeremy, this is Mike. One of the things that we're most excited about in this acquisition is the combination of assets that we have in the Permian. You've heard us talk about concentration in that area, and MPLX's goals in that area with our gathering and processing system, as well as our crude initiatives are very complemented by Andeavor's Gray Oak system, as well as [Inaudible] and gathering system. So our -- our Permian combination footprint is one of the things that has us most excited about this combination.

I think you're going to see a lot more activity from us in the area as time goes on, and having the assets in a combined model gives us a lot of things to be excited about. As far as, you know looking over the portfolio we're going to continually look and optimize our portfolio as time goes on. We don't have anything to disclose at this point, but that's always an ongoing process for the partnership.

Jeremy Tonet -- J.P. Morgan -- Analyst

That's helpful thanks. And just want to touch on Andeavor here a bit, it seemed like the EBITDA in 1Q missed a strip by a bit here. And so just want to see -- not sure if they're tracking the guidance that they had stated before. And does this performance kind of factor into the deal terms that you guys agreed to?

Don Sorensen -- President

Yeah. this is Don Sorensen, Jeremy. So for first quarter a bit -- what we ended up with was -- there was apparently about $10 million worth of one-time items that impacted 1Q. Otherwise, that was -- that was really the primary driver in there.

And I'll let Gary speak to -- and how that factored in anything in the deal.

Gary Heminger -- Chairman and Chief Executive Officer

Well, of course we looked at all the financial forecasts going forward. I would say that it had very limited, if any effect on on the transaction.

Jeremy Tonet -- J.P. Morgan -- Analyst

OK great. And then sorry, just to clarify with capline was FID taken at this point. I'm not sure if you had said that exactly.

Mike Hennigan -- President, MPLX

Yeah. This is Mike, Jeremy. So we just closed the open season yesterday. What I'm communicating to the market is we have significant interest to move forward, but the process has to play out.

We have to get with the owners, share all the information, but we're highly confident that we've received enough support that we believe capline is going to reverse and start light oil in September of 2020, and heavy oil in the early part of 2022. But we have to continue with the process, get through the owners, notify the people who are committed shippers etc. So just closed yesterday. So it's very fresh, but we wanted to communicate to the market that we've got significant support.

Jeremy Tonet -- J.P. Morgan -- Analyst

Great thanks for taking my questions.

Mike Hennigan -- President, MPLX

You're welcome.

Operator

Thank you. Our next question comes from Shneur Gershuni from UBS. Your line is open.

Shneur Gershuni -- UBS -- Analyst

Hi, good morning, everyone. Maybe to start off. On a stand-alone basis, are there any changes to your EBITDA expectations for both MPLX and ANDX for 2019 and 2020?

Mike Hennigan -- President, MPLX

Yes, Shneur. So one of the things that we were trying to communicate so on -- as far as guidance going forward, you know Pam had stated that our distribution guidance will stay at a penny per quarter for MPLX and for the combined entity. So that's one piece. We're also reaffirming our volume guidance that we have given -- you know we had given eight quarters of volume guidance for only one quarter into that timeframe.

And I know there's a lot of questions related to the Northeast on a volume basis. So let me just give you a little bit of fact around that. Our first-quarter gathering up in the Northeast was 26% year-on-year growth, our processing was 18% year-on-year growth, and our fractionation was 17% year-on-year growth. So we're very conscious of the concept out there about producers living within cash flow, and potentially slowing as time goes on.

Right, today we're not seeing that in the estimates that we have or in the actual Q1 results. So at this point, we're still reaffirming that guidance that we have given, and that's that's all the guidance that we're reaffirming at this point. As far as 2020, we'll take that up toward the end of the year.

Shneur Gershuni -- UBS -- Analyst

OK. Fair enough. Thank you for that. As the follow up question.

You talked about a lot of projects in your prepared remarks, specifically wanted to ask about BANGL, you've got fracks and talked about LPG exports and so forth. You know, would you expect your leverage to be manageable during that kind of a process? I think you also have capline as well too and would it be possible or are you considering JV partners. Some of your peers have talked about potentially doing an LPG export facility for example. Just kind of wondering your thoughts and maybe if you can share return expectations as well too.

Mike Hennigan -- President, MPLX

Yes, Shneur. To answer the first part of your question. Yeah, we are expecting to partner. You kow, today we're announcing that we moved into the crude project Wink-to-Webster where there's many other project -- partners Exxon, as well as Plains and Lotus.

So that's what's happening on the crude side. As far as Whistler and BANGL specifically to that question, we do anticipate reaching RFID very shortly is our expectation. And yes, there will be partners involved in those projects as well. And to your ultimate question is, and this was one of things that was brought up at our investor day is we are guiding our capital to include those projects at this point.

So we're expecting to maintain our capital numbers, as well as our leverage numbers that you were asking about.

Shneur Gershuni -- UBS -- Analyst

And return expectations as well too?

Mike Hennigan -- President, MPLX

Yeah. So we haven't given individual projects, Shneur. But we have been saying that we're targeting mid-teens returns on each of the projects that we engage in, but we haven't given any individuals on each of those projects.

Shneur Gershuni -- UBS -- Analyst

Perfect. Thank you very much, Mike. I really appreciate the color.

Mike Hennigan -- President, MPLX

You're welcome, Shneur.

Operator

Thank you. Our next question comes from Spiro Dounis of Credit Suisse. Your line is open.

Spiro Dounis -- Credit Suisse -- Analyst

Hey. Good morning everyone, and congrats on get it over the finish line here. First question just around synergies, are able to quantify any potential operating synergies in this deal. And along those lines are there any obvious capital boyle -- excuse me, capital avoidance synergies you can point to?

Mike Hennigan -- President, MPLX

Yes. So at investor day, we guided for a $55 million of total synergies that would break out to about $25 million regarding the transaction itself, and about $30 million that's irrespective of the transaction. So we're reaffirming $55 million of mid-stream synergies for the MPC family. As far as the capital numbers, you know we expect on a go-forward basis that we'll have a much larger footprint that will enable us to more efficiently hydrate our portfolio and look for where we can get the highest returns on invested capital.

The work cited to have a bigger platform combining the MLP will give us more opportunities. And at the same time, allow us to be more selective as to where we invest capital.

Spiro Dounis -- Credit Suisse -- Analyst

OK. I appreciate that. And maybe along those lines, can provide a little more color on how you actually see the combination enhancing the position in the Permian. Obviously, you've got assets there there is some degree of overlap.

But maybe just more specifics on how that's actually going to be value creating.

Mike Hennigan -- President, MPLX

Yeah. Not to be repetitive but, I was just trying to say earlier that you know the MPLX footprint in the area is strong in the gathering and processing area on natural gas and NGL. The ANDX footprint in the area is very strong on the crude side with the crude gathering system, and we have two individual crude pipeline projects both Gray Oak under development about to start up at the end of '19, which we're very excited about getting that along and getting cash flows from it. And as well as we just announced that we'll be in a crude project which will start up in early '21, and we're also continuing to develop the Whistler and BANGL with rope and have no real shortly.

So I think the messaging there is the gathering and processing and combination from Andeavor and MPLX is powerful, and a combination, as well as synergistic on the long-haul pipeline side. So that's one of the areas that I said we're most excited about bringing the combined assets together.

Spiro Dounis -- Credit Suisse -- Analyst

Understood. Appreciate the color. Thanks Mike.

Mike Hennigan -- President, MPLX

You're welcome.

Operator

Thank you. Our next question comes from Michael Blum of Wells Fargo. Your line is open.

Michael Blum -- Wells Fargo Securities -- Analyst

Thank you and good morning, everyone. I just want to go back to the -- just to make sure I heard that correctly on the guidance. So you had previous stand-alone EBITDA guidance for '19 and '20 for both MPLX and ANDX. I guess can you just update us on where that stands today?

Mike Hennigan -- President, MPLX

Yeah. Michael, what I was saying is what we're reiterating is that MPLX will be offering one penny per quarter guidance through the end of the year as far as distribution, which is what we stated and at investor day. So we are reaffirming that. We are reaffirming the volume guidance on the numbers that I had given you earlier.

The only other thing that I didn't mention earlier is everybody should take into account some NGL pricing sensitivity that Pam mentioned in her prepared remarks. We've consistently given what our sensitivity is in that area. That's the one area that I think people should take into account as they look at going forward. Other than that, we're not reaffirming, you know anything other than what I've just spoken about and we'll relook at this once the combination is closed, and our outlook is is more clear for 2020.

Michael Blum -- Wells Fargo Securities -- Analyst

OK. Got it. And then in terms of BANGL and Whistler. I just want to make sure I'm hearing correctly.

We have communication on that and it seems like you're sort of pointing to the fact that you think you're going to be able to move forward with RFID and both of those projects. I just want to make sure I heard that tone correctly. And then secondarily, anything you can share in terms of who the partners are in Whistler at this point. Because as you know, at least two out of those four partners of the original project are no longer at least equity owners.

So anything you could share that would be great. Thanks.

Mike Hennigan -- President, MPLX

Yeah. So you are picking up the right tone. We remain very confident that we're going to get there, but we're not at signed documentation with everybody at this point. I was hoping that we would be RFID by the time we got to the call.

But we're very close though the partners that we have identified publicly are still Whitewater midstream as our partner. All the other partners that are in the project potentially, we are not disclosing at this point. We are in documentation phase with a variety of parties counter parties as you would expect say on the natural gas pipeline. There's many parties who are looking to contribute and commit to the two bcf pipeline, but we don't have all the documentation together at this point.

So I think you're picking up the right tone. We're confident, but until we get signed documentation we will remain disciplined and we won't move forward until we got that. So hopefully, RFID very shortly, positive indications and hoping to get it across the finish line surely.

Michael Blum -- Wells Fargo Securities -- Analyst

Thank you.

Mike Hennigan -- President, MPLX

You're welcome.

Operator

Thank you. Our next question comes from TJ Schultz of RBC Capital Markets. Your line is open.

TJ Schultz -- RBC Capital Markets -- Analyst

Great. Good morning. On Wink-to-Webster you referenced 15% equity. Do you expect an undivided joint interest basis just trying to understand your control of the barrels there.

Mike Hennigan -- President, MPLX

Now, we're looking at an outright JV joining the project as a JV with the existing partners that are part of it. Like I said there is -- you know, we've signed an LOI. We have agreement in principle and on the major points of it, but we still have to get to a final documentation. But it's our expectation that we'll do that and then we'll be part of the project as a JV partner.

TJ Schultz -- RBC Capital Markets -- Analyst

OK. Understood. And then with the MLP combination analysis and progress on some of the MPC-owned mid-stream assets any updated thoughts on drops, what assets may make sense doing this, and then more specifically, are you able to do drops prior to the close of the MLP deal.

Mike Hennigan -- President, MPLX

So we don't have anything to guide on that area, but we do know that MPC has some terrific midstream assets. Gray Oaks still sits at MPC, capline still sits at MPC South Gateway still sits at MPC. So these are all opportunities for the marathon family going forward.

TJ Schultz -- RBC Capital Markets -- Analyst

OK great. Thanks.

Mike Hennigan -- President, MPLX

You're welcome.

Operator

Thank you. Our next question comes from Justin Jenkins of Raymond James. Your line is open.

Justin Jenkins -- Raymond James -- Analyst

Great. Thanks. Good morning, everyone. Mike I think you touched on this a little bit with the with the capline reversal.

Kind of thoughts and expectations, but I think the slides also mentions a potential expansion of loop. Can you maybe go into a little more detail there?

Mike Hennigan -- President, MPLX

Yeah. What I was trying to say, Justin, earlier is, you know we just closed the open season yesterday. So notifications haven't occurred. The owner meetings haven't occurred.

So it's very early on the process, but since we had the call today I atleast wanted to communicate to the market that the open season closed, we got significant volume, our expectation is that we'll move forward. But the next step in the process is working with each of the individual owners and we do have an expectation that, you know the shippers who are committing will want to export via loop. As we've mentioned many times, loop is the only VLC-capable port in the U.S., it's obviously a strategic asset on the Eastern Gulf. Marathon holds a very strong interest in that.

And we expect over time, that that'll become the premier export facility on the eastern Gulf.

Justin Jenkins -- Raymond James -- Analyst

Understood. Thanks for that Mike. And I guess the follow up is maybe again on capital here. If you add that to growth capital numbers for 2020 together between MPLX and ANDX, $2.6 billion in the guidance.

Is that the right number to think about on a pro forma basis? Or are we not ready to disclose that here?

Mike Hennigan -- President, MPLX

No. I think what -- you're going to see some more information from us at a later date. It's our expectation that we'll we'll sit down and look and see how we can hydrate the project but for 2019, I think that's still very good guidance at this point. But go on a go-forward basis, what we're excited about is an expanded opportunity set with all the assets that we have.

And then the ability to also high grade that from the backlog that sits at MPLX, as well as ANDX. So we've got two strong growth platforms that we'll be combining and then looking the high grade is the way to think about it.

Justin Jenkins -- Raymond James -- Analyst

Got it. Thanks Mike.

Mike Hennigan -- President, MPLX

Welcome.

Opertor

Thank you. Our last question comes from Dennis Coleman of Bank of America Merrill Lynch. Your line is open.

Dennis Coleman -- Bank of America Merrill Lynch -- Analyst

Hi, good morning and thanks for taking my question. Congratulations on all this. A lot to say grace over. Couple of questions just on the Wink-to-Webster project I guess.

So that goes to Webster obviously, Texas City a little further down you're talking about the export terminal at Texas City, but just it seems like just NGL is it -- could you be exporting crude from Texas City and will -- which should we assume just Webster you'll extend that pipeline from there?

Mike Hennigan -- President, MPLX

That's correct. I mean the project's named Wink-to-Webster, but obviously, our interest is getting down to Texas City where we do have a tank form that will have export capabilities as well. So yeah, the base case is to connect Webster down to the Marathon system in Texas City to support the refinery at Galveston Bay, as well as to support the time farm that's owned by MPLX or any shippers that want to export. So that's the next phase of development that will engage with with this process.

So I think the takeaway is it's a growth pipeline project that comes into the area, synergy for MPC, additional growth for MPLX. So we're excited about moving forward.

Dennis Coleman -- Bank of America Merrill Lynch -- Analyst

OK. And if I could just -- my follow up maybe again, just another detail. You talk about the Gulf Coast fractionation, three potential fractionators. Are those third party fraction leaders that you're talking about? Or is that something that that would be within the Marathon family?

Mike Hennigan -- President, MPLX

So a little bit of both. As I said, on all these projects we expect to have partners. So we expect to have equity interest in the assets, as well as having partners that who also have equity interest in the assets. So our goal is to put ourselves in a position where we maintain, you know an important level of capital investment.

At the same time, diversifying our portfolio across crude, natural gas, and NGL. So diversification is part of this. Our expectation is to have equity in each of the projects. At the same time, have partners in each of them as well.

Dennis Coleman -- Bank of America Merrill Lynch -- Analyst

Great. Thanks very much.

Mike Hennigan -- President, MPLX

You're welcome.

Operator

Thank you. [Operator instructions]

Kristina Kazarian -- Vice President, Investor Relations

All right. Operator, it looks like there are no further questions at this time. So thank you for your interest in MPLX and our strategic combination with Andeavor Logistics. Should you have additional questions or would like clarifications on topics discussed this morning.

The IR team and I will be available to take your calls. Thank you so much for joining our call today.

Duration: 37 minutes

Call participants:

Kristina Kazarian -- Vice President, Investor Relations

Gary Heminger -- Chairman and Chief Executive Officer

Mike Hennigan -- President, MPLX

Pam Beall -- Chief Financial Officer, MPLX

Jeremy Tonet -- J.P. Morgan -- Analyst

Don Sorensen -- President

Shneur Gershuni -- UBS -- Analyst

Spiro Dounis -- Credit Suisse -- Analyst

Michael Blum -- Wells Fargo Securities -- Analyst

TJ Schultz -- RBC Capital Markets -- Analyst

Justin Jenkins -- Raymond James -- Analyst

Opertor

Dennis Coleman -- Bank of America Merrill Lynch -- Analyst

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