Image source: The Motley Fool.
Date
Tuesday, August 5, 2025 at 1:30 p.m. ET
Call participants
Chief Executive Officer — Maryann T. Mannen
Chief Financial Officer — Kris Hagedorn
Executive Vice President, Corporate Strategy — Dave Heppner
Executive Vice President, Operations — Gregory S. Floerke
President, Logistics & Storage — Shawn Lyon
Vice President, Investor Relations — Kristina Kazarian
Need a quote from a Motley Fool analyst? Email [email protected]
Takeaways
Strategic acquisition--MPLX(MPLX -2.94%) acquired North Wind Midstream for just under $2.4 billion, adding 200,000 dedicated acres, over 200 miles of gathering pipelines, and 150 MMcf/d of sour gas treating capacity as of the August 2025 acquisition announcement, with expansion to 440 MMcf/d expected online in the second half of 2026.
Accretion and returns-- The North Wind acquisition is expected to be immediately accretive to distributable cash flow (non-GAAP), targeting a seven times multiple on 2027 EBITDA (GAAP/non-GAAP basis not specified) following asset ramp-up, with an anticipated mid-teen unlevered return, including expansion capital (as stated by management, not specified as GAAP or non-GAAP).
Minimum volume commitments-- North Wind assets are supported by average contract lives of 13 years and 80% minimum volume commitment (MVC) revenue as stated by management.
Permian platform expansion-- MPLX completed the acquisition of the remaining 55% of the Bengal NGL pipeline and increased its stake in the Matterhorn Express Pipeline, consolidating ownership of key Permian Basin assets.
Growth capital allocation-- MPLX announced $3.5 billion in bolt-on transactions year to date and remains on track to invest $1.7 billion in organic growth this year, with over 90% of growth capital targeting natural gas and NGL services; 40% of planned 2025 organic capital deployed in the first half.
Adjusted EBITDA-- Adjusted EBITDA reached $1.7 billion in Q2 2025, up 2% year over year.
Operational metrics-- Pipeline volumes increased year over year in Q2 2025.
Marcellus performance-- Marcellus processing utilization reached 92% in Q2 2025, reflecting sustained producer demand.
Capital return-- MPLX returned $2.2 billion to unitholders year to date, including $200 million in unit repurchases.
Distribution growth-- The quarterly distribution was most recently raised by 12.5% in the third quarter of last year; management reaffirms the durability of a 12.5% annual growth trajectory for distributions in 2026 and beyond.
Financial flexibility-- MPLX ended Q2 2025 with $1.4 billion in cash, and retired $1.2 billion of senior notes in Q2 2025, and reiterated a leverage target below four times.
Maintenance & expense-- Planned maintenance drove an increase of over $30 million in project-related expenses in Q2 2025, with an expected incremental $40 million rise in Q3 due to tank maintenance in refinery logistics.
Capacity expansions-- Secretariat plant's 200 MMcf/d addition will bring total Permian processing to 1.4 Bcf/d by 2025; gas processing capacity in the Northeast is projected to reach 8.1 Bcf/d, and fractionation capacity 800,000 bbl/d by the second half of 2026.
North Wind economics-- Incremental capital needs to complete North Wind's expansion to 440 MMcf/d and the third AGI well total around $500 million over the next twelve months, with buildout already underway.
Contract optionality-- As North Wind processing contracts roll off in two to three years, MPLX gains NGL control and value chain flexibility across its system.
Future capacity-- The Matterhorn and Bengal expansions, new fractionators, and a JV export terminal are on target, with first frac online in 2028 and the second in 2029 to capture growing NGL supply and global LPG demand.
Summary
The acquisition of North Wind Midstream significantly expandsMPLX(MPLX -2.94%)'s Delaware Basin platform, securing a new source of dedicated acreage and enhancing sour gas treating capacity for accelerated organic and commercial growth. Management reported that all recently acquired and existing assets are complementary, adjacent, and integral to executing an integrated value chain strategy across the Permian and Gulf Coast. Execution of $3.5 billion in bolt-on deals and strategic buildouts in 2025 demonstrates a disciplined focus on natural gas and NGL growth, while the balance sheet remains flexible following the retirement of over $1.2 billion in debt and ample liquidity.
Hagedorn confirmed planned debt financing for the Bengal and North Wind acquisitions, reinforcing leverage discipline and acquisition capacity.
Executive Vice President Heppner stated, "Those incremental growth opportunities are not in our base economics." highlighting potential upside as project ramp continues at North Wind.
Mannen stated, "12.5% is well within our sights," directly signaling management's confidence in continuing recent distribution growth rates, specifically referencing the 12.5% distribution increase targeted for 2026 and beyond.
Floerke emphasized the economic quality and integrated opportunity of New Mexico crude, stating the acquired North Wind assets are adjacent and open further organic expansion potential in what he described as "the most attractive economic crude production area."
Industry glossary
AGI well: Acid Gas Injection well used to inject sour gas streams (containing CO2 and H2S) into subsurface formations for environmentally compliant disposal or storage.
Fractionation: The process of separating various hydrocarbon components (especially NGLs) in a mixed stream via differences in boiling points.
MVC (Minimum Volume Commitment): Contractual agreements ensuring a minimum volume of product is shipped or processed, providing predictable revenue streams for midstream operators.
BANGL (Bengal NGL Pipeline System): MPLX's natural gas liquids pipeline system in the Permian Basin, recently brought to 100% ownership.
Frac (Fractionator): Facility that separates NGL streams into purity products like ethane, propane, and butane.
Distributable cash flow: Cash generated by master limited partnerships available for paying distributions to unitholders, after capital expenditures and related commitments.
Full Conference Call Transcript
Maryann Mannen: Thanks, Kristina. Good morning. Thank you for joining our call. Last week, we announced the strategic acquisition of North Wind Midstream for just under $2.4 billion. Northwind provides sour gas gathering and treating services in Lea County, New Mexico. The system adds over 200,000 dedicated acres in the Delaware Basin, 200 plus miles of gathering pipelines, two operating asset gas injection wells, and a third permitted. The system currently has 150 million cubic feet per day of sour gas treating capacity. We will be completing the expansion to 440 million cubic feet per day expected to be online in the second half of next year. The system is supported by minimum volume commitments by top regional producers.
The transaction is expected to be immediately accretive to MPLX's distributable cash flow and represents a seven times multiple on 2027 EBITDA after the treating system reaches full capacity. The anticipated mid-teen unlevered return is inclusive of incremental capital spend associated with in-process expansion activity. Increased crude drilling activity in the eastern edge of the Northern Delaware Basin has been enabled by increased sour gas treating and AGI well capacity provided by these assets. The assets will provide prompt treatment solutions for existing and new producer customers. Our fee structure comprises gathering, compression, processing, as well as more extensive CO2 and H2S treating. The higher levels of CO2 and H2S merit a higher fee structure compared to other regions.
On average, this gets to an aggregated rate significantly above other regions. These assets are complementary and adjacent to our existing Delaware Basin natural gas system and will expand MPLX's treating and blending operations. The addition of 200,000 dedicated acres will increase MPLX's access to natural gas and NGL volumes. The optionality to direct these new volumes through our integrated system will accelerate our growth opportunities in the Permian. MPLX has also completed two previously announced Permian-based acquisitions. In June, we closed on the acquisition of an incremental 5% stake in the Matterhorn Express Pipeline, further enhancing our integrated natural gas value chain in the Permian Basin.
In July, we closed on the remaining 55% interest in the Bengal NGL pipeline system. Full ownership of BANGL and its expansion opportunities enhance our Permian platform as we connect growing NGL production from the wellhead to our recently announced Gulf Coast fractionation facilities. The progress and execution of our strategic initiatives give us conviction in the sustainability of our mid-single-digit adjusted EBITDA growth outlook for 2025 and beyond. In the second quarter, we reported adjusted EBITDA of $1.7 billion, a 2% increase year over year. For the first half of the year, we achieved 5% adjusted EBITDA growth versus 2024. The Marcellus and Utica rig counts remain steady and volumes remain strong.
Longer laterals are resulting in higher production volumes, and we expect volumes to grow in the second half of the year. Producer consolidation further illustrates the value seen in the liquids-rich acreage of the Utica, where condensate development activity continues to increase. In the Permian, steady drilling activity, rising gas oil ratios, and the progression of export projects will support growth opportunities for our business. More broadly, we expect natural gas demand will accelerate over the next few years to provide increased electricity generation for data centers and overall electric grid demand. As demand for natural gas-powered electricity rises, of its producer customers.
By constructing processing facilities on a just-in-time basis, maximizing the utilization of existing assets, optimizing value chains, and strengthening its strategic partnership with MPC, MPLX is advancing its strategic growth objectives within the Permian. Our seventh processing plant, Secretariat, is expected to be online by 2025. Secretariat's 200 million cubic feet MPLX's total Permian processing capacity to 1.4 billion cubic feet per day. We are progressing the expansion of Bengal's mainline from 250,000 to 300,000 barrels per day. Value chain in the second half of next year. BANGL is an instrumental piece of MPLX's integrated Permian, and it will deliver volumes to MPLX's two Gulf Coast fractionation facilities, which are being constructed near the Galveston Bay refinery.
The first frac, as well as our joint venture export terminal, is expected to enter service in 2028. And we anticipate the second frac will enter service in late 2029. Once complete, MPLX's fully integrated NGL value chain will stretch from the wellhead to water on the Gulf Coast and will supply LPGs to a growing global market. Within natural gas, we are advancing our value chain strategy. MPLX and its partners recently upsized the 1.75 to 2.5 Bcf per day following strong customer demand. The additional capacity for bidirectional service between Agua Dulce and the Houston area highlights the value shippers ascribe to assessing multiple premium markets on the Gulf Coast.
The continued build-out of our Permian to Gulf Coast natural gas system enhances our ability to provide shippers with premium market access and superior flexibility while enhancing MPLX's natural gas value chain through additional growth opportunities. MPLX has announced $3.5 billion of bolt-on transactions in 2025, and we remain on track to invest $1.7 billion on our organic growth plans in 2025, having already deployed 40% of this capital in the first half of the year. Over 90% of MPLX's total growth capital is being allocated to opportunities within our natural gas and NGL services segment. In the Marcellus, our largest operating region, construction of our Harman Creek III processing plant and fractionation capacity align with producer drilling plans.
This new complex will feature a 300 million cubic feet per day gas processing plant and a 40,000 barrel per day deethanizer supported by strong producer commitments. By the second half of next year, we anticipate MPLX's gas processing capacity in the Northeast will reach 8.1 billion cubic feet per day, and fractionation capacity will reach 800,000 barrels per day. In our crude oil and products logistics segment, we are expanding crude gathering infrastructure in the Permian and Bakken basins, advancing butane blending initiatives at our product terminals, developing new market outlets, driving organic volume growth through our integrated network, and pursuing other high-return projects aimed at maximizing the utilization of our assets.
We are firmly committed to growing the partnership through our lens of strict capital discipline. We expect mid-teen returns on our investments and are confident that successful execution of these projects will extend the durability of our mid-single-digit growth trajectory. This positions us to continue reinvesting in the business while supporting consistent annual distribution increases. Our strong financial flexibility enables us to pursue strategic acquisitions that complement our organic growth plans. We stay disciplined in our approach and have ample capacity to pursue more opportunities while maintaining leverage below four times. With a pipeline of growth opportunities, we are well-positioned to generate resilient cash flows that underpin our commitment to deliver long-term value and return capital to unitholders.
Now let me turn the call over to Kris to discuss our operational and financial results for the quarter.
Kris Hagedorn: Thank you, Maryann. I will now provide an overview of our operational and financial performance highlights for our Crude Oil and Products Logistics segment. Segment adjusted EBITDA increased $39 million when compared to 2024. The increase was driven by higher rates and throughputs across our systems, partially offset by higher variable operating expenses. Pipeline volumes were up year over year, primarily due to increased refinery demand and incremental gathering volumes in the Permian. Moving to our Natural Gas and NGL Services segment on slide 11, segment adjusted EBITDA decreased by $2 million compared to 2024, as growth from equity affiliates was offset by higher operating expenses and project spending.
Higher project spending in the second quarter included significant planned maintenance of 13 plants in the Marcellus, Bakken, and Rockies regions, all of which were safely and successfully executed by our operations teams. Gathered volumes decreased 1% year over year, as growth in the Southwest was primarily offset by less dry gas production in the Utica and declining production in the Rockies. Processing volumes increased 2% year over year, primarily from increased throughput in the Utica and Permian Basins. Processing volumes in the Utica have increased 13% year over year. Marcellus processing utilization was 92% for the quarter, reflecting strong producer activity in the region.
Total fractionation volumes declined 5% year over year, primarily due to planned maintenance and outage time. Adjusted EBITDA of $1.7 billion and distributable cash flow of $1.4 billion increased 21%, respectively, from the prior year. Project-related expense increased over $30 million in the quarter, and we anticipate an incremental $40 million increase from the second quarter to the third quarter, primarily due to some planned tank maintenance within refinery logistics. We retired $1.2 billion of senior notes scheduled to mature in June and ended the quarter with a cash balance of $1.4 billion.
Looking forward, MPLX intends to finance its recently completed acquisition of the remaining 55% of the Bengal pipeline system and its announced acquisition of Northwind Midstream with debt. MPLX maintains a strong balance sheet and the ability to keep leverage below our comfort level of four times. Now let me hand it back to Maryann for some concluding thoughts.
Maryann Mannen: Thanks, Kris. MPLX has demonstrated its ability to grow both cash flows and unitholder distributions by executing on its strategic priorities. Year to date, we have returned $2.2 billion to unitholders, inclusive of $200 million in unit repurchases, as the value proposition for our units remains strong. Through prudent capital allocation, cost control, and operational optimization, we have achieved a 7% compound annual growth rate in both adjusted EBITDA and distributable cash flows over the past four years. Year to date, MPLX has announced $3.5 billion of bolt-on transactions. These assets create immediate value for unitholders and enhance MPLX's growth platform in a capital-disciplined manner.
We believe the integration of these assets will further strengthen MPLX's ability to deliver mid-single-digit adjusted EBITDA growth. Our strong and growing cash flow profile, supported by a robust 1.5 times distribution coverage and low leverage, has enabled us to support our quarterly distribution, which most recently increased by 12.5% in the third quarter of last year. Looking ahead, our growing portfolio is well-positioned to sustain this pace of annual distribution growth. In summary, MPLX is well-positioned to capitalize on opportunities that fit our strategic roadmap as we execute our strategy targeting mid-single-digit growth. As a strategic asset for Marathon, MPLX currently provides $2.5 billion annually in cash to MPC through its growing distribution.
MPLX plays a vital role in advancing shared value creation initiatives, further reinforcing the strength of our partnership. Our unwavering focus on safety and operational excellence, strategic growth opportunities, and strong financial flexibility enable us to generate resilient cash flows. This, in turn, supports our commitment to delivering peer-leading capital returns to unitholders. Now let me turn the call over to Kristina.
Kristina Kazarian: Thanks, Maryann. As we open the call for your questions, as a courtesy to all participants, we ask that you limit yourself to one question and one follow-up. If time permits, we will re-prompt for additional questions. Operator, we are now ready for questions.
Operator: Thank you. We will now begin the question and answer session. The first question in the queue is from John Mackay with Goldman Sachs. Your line is open.
John Mackay: Can you talk about the ramp on Northwind from here through 2026? And then after that, how to think about some of the downstream processing and NGL growth opportunities? And maybe as part of that, just clarify whether or not those downstream opportunities are reflected in the seven times, 2027 multiple? Thanks.
Maryann Mannen: Hey, good morning, John. Thanks for the question. So first of all, just want to say we think the economics in this transaction are extremely compelling, as you can see. And any incremental capital, and I will share with you how that should unfold here. Any of the incremental capital that we have assumed by 2026, so by the end of next year, we should be at the run rate EBITDA that we are referencing that supports our roughly seven times EBITDA multiple, which means by 2027, we will have reached that EBITDA.
That time period 2026, these projects to complete to get us to the 440 as well as the permitted third AGI well, all of those activities are well in hand. I am going to ask Dave to address your second question, which is the opportunities further beyond that.
Dave Heppner: Yes. Thank you, Maryann. And so John, just to touch on that, let me be first clear. Those incremental growth opportunities are not in our base economics. In base assumptions of Northwind. With that being said, it does provide the platform for a lot of incremental growth opportunities that we are currently evaluating. And not only just growth, but also incremental optimization and commercial optionality as we go forward with the Northwind. So I think over the next year or so, as we continue to build out and ramp up the Northwind volume, we will continue to evaluate those commercial and operational opportunities.
John Mackay: Alright. That is great. I appreciate that. Maybe looking a little wider, you have announced a lot of bolt-ons and projects over the last year. It has given some longer-term visibility on EBITDA growth. Could you talk a little bit about the distribution? One, kind of what you are thinking for this year? And then looking forward, kind of how many years of 12.5% growth we expect from here?
Maryann Mannen: Yes. Sure, John. Thank you. So look, we believe our 12.5% distribution increase is supported very durably by the growth that we are trying to deliver. I mentioned 7% growth. We have seen that over the last few years, both in EBITDA and in distributable cash flows. So certainly, as we have been committing, we think that 12.5% in 2026 and beyond, certainly for the next few years, is very durable. So most definitely, 12.5% is well within our sights, and you can continue to see the opportunities. Dave mentioned a few of them here. You know the work that we are putting together both on our capital plan. We have got assets in the Permian coming online.
I mentioned a 12.5% distribution increase that we have been committing to.
John Mackay: That is great. Thank you.
Maryann Mannen: You are welcome, John.
Operator: Next question in the queue is from Manav Gupta with UBS. Your line is open.
Manav Gupta: Congrats on the good deal. My first question is, Maryann, there were some recent comments made about LPG being in the bear market and why it probably is not good to invest in these. You are obviously building your fracs, and then your partner is going to export some of the stuff. So just trying to understand what gives you the confidence that you and your partner can make the economics work on the new fracs as well as exporting them given some of the bearish market sentiment on LPG exports.
Maryann Mannen: Good morning, Manav. Thank you for the question. We are very confident in our ability to fill those fracs. As you know, we have committed to completion of frac 01/2028, frac 02/2029. One of the other elements that we have been sharing, in addition to that, we have got third-party contracts that will also expire that will obviously come across our system. We continue to believe the economics will be there. We recognize through some of those comments as well. But we are highly confident in our ability both to fill those fracs and see the economics in that export model.
Manav Gupta: Perfect. Thank you. And then a quick follow-up. The overall Permian growth strategy, you are pursuing multiple ways to grow your Permian alone with JV partners. Can you just talk about, you know, how you are looking to decide this Permian growth strategy for over the next two or three years? Thank you so much.
Maryann Mannen: You are welcome. Thank you. As you know, we have been working on our Permian growth strategy for the last few years. We think this acquisition that we have talked about, Northwinds, is both adjacent and complementary to our current system. We have completed other acquisitions, the completion of BANGL as an example. We just closed that, giving us 100%. We talked about moving that from 250 to 300. That is well on its way. When you look at our capabilities in this region, obviously, this particular northern edge of the Delaware has some of the best rock we think in the Permian, lower gas to oil ratios.
Obviously, it comes with some complexity given the H2S and CO2 content, but we can provide the processing and treating capabilities here. And it works extremely nicely with the rest of the commitments we have made in the Permian. So we think for the next few years, we can continue to look for other opportunities. And as we build out this comprehensive system, we should be able to demonstrate our commitment and our ability to deliver on this Permian strategy.
Keith Stanley: Hi, good morning. Maryann, you said at the end of your prepared remarks that acquisitions will strengthen the ability to generate mid-single-digit growth. As you get larger, should we think of acquisitions as a component of getting to the mid-single-digit growth? Or should we think of that as incremental to the growth rate?
Maryann Mannen: Yes. Good morning, Keith. When we think about our strategy, we have said we will put capital to work organically. This year it is in a range of about $1.7 billion. As you know, we have got Secretariat, we have got the first phase of our frac, we have got Harmon Creek well on its way. So we clearly see opportunities for organic growth. And then when we look at M&A, we also believe there are opportunities there. So it is not as if we start out the year with an allocation of how much is M&A and how much is capital. We look at all of those opportunities. They must meet our strategic rationale.
Obviously, our commitment to mid-single-digit growth is a critical component. And then lastly, we want to be sure that they can generate mid-teen returns. All of those, I mean, the way we put capital to work should continue to support our ability to grow EBITDA and then therefore support our distribution. Hope that answers your question.
Keith Stanley: It does. Thank you.
Maryann Mannen: You are welcome.
Keith Stanley: Second one, on Northwind, can you say any sense of how long the existing processing and transportation contracts are for those assets? And walk through the mechanics of how you would eventually control the NGLs as the gatherer and treater? Would you need to add processing to the footprint? Or any details you can provide.
Maryann Mannen: Sure. So first, I think your first question was kind of what is the contract duration on processing? And we are probably somewhere those contracts today somewhere in the range of two to three years on those processing contracts. Keep in mind overall, and I think I mentioned this in the prepared remarks as well. These contracts that we have for these MVCs are average contract life of thirteen years. So 80% of this revenue is MVC just to be sure that I was clear on that. And then some of the top producer customers that we I mentioned there are actually customers that are operating today on our system.
But let me look at Dave and I am going to ask him to give you a little more color on your question.
Dave Heppner: Thank you, Maryann. So Keith, I touched on a little bit earlier. So as these contracts roll off and we have control and access to the NGLs, why we do not need that volume? In, you know, in our announced, you know, Banglaq acquisition and our Gulf Coast fractionation and export project. This incremental volume I tried to touch on a little bit earlier, gives us flexibility and optionality on how and where when we want to move those volumes. And that is probably the most exciting part about this.
So as we look forward, not only this opportunity, but as we think about some of the growth opportunities that Maryann touched on, it is not just grow to grow, but as growth increased the integration, the optionality and of our entire value chains. Hopefully that helps a little bit.
Keith Stanley: That helps. And I missed the thirteen-year commentary. So thanks for that as well.
Dave Heppner: You are most welcome.
Maryann Mannen: Thank you.
Operator: The next question in the queue is from Theresa Chen with Barclays. Your line is open.
Theresa Chen: Good morning. Following up on the commentary related to Northwind, from here, the current capacity to the full 440 MMcf per day, yeah. Good morning, Theresa. So we estimate in a range of about $500 million between now and the next twelve months. That will complete the $440 million as well as the third already permitted AGI wells. So two of them currently operating, permitted. So within the next twelve months just under $500 million and most of that is already been started. Thank you. And then turning to the residue gas side of things, in addition to your NGL build-out, you have made significant progress in growing this asset base via your JVs.
Looking at the long-term visible demand drivers for gas, Maryann, what do you think are the logical, strategic next steps to augment your exposure here? Is it a matter of more gas transmission? Is it something more direct on the gas to power side of things? Is it liquefaction? What are your thoughts here?
Maryann Mannen: Yes. Thanks, Theresa. I am going to pass it to Dave, he will take your question.
Dave Heppner: Hey Theresa, I will kick it off and maybe I can ask some of my peers if they want to add on to it when you think about data centers and some of the other growth. But yes, you touched on it. And as we think about the Permian and specifically and as you know our strategy, a lot of long haul pipelines out of there. We do not think that is an overbuild situation on long haul pipes. Let me start with that.
So whether it be Whistler, Blackcomb, Matterhorn and our increased equity ownership in that, you could see that we have a lot of confidence in the growth, not only the growth profile of the Permian on the gas side, but also the demand side of it. So as you know, down in the Gulf Coast with a lot of the LNG activity, but also with the increased growing activity around data centers, we believe, not only from supply but also from a demand perspective. There is a lot of opportunity. And I think we have proven that with the project we have announced most recently. So, the one we have not touched on is Traverse.
So not only just the long haul pipes out of the basin, but giving our shipping customers the utmost flexibility to get those premium markets in addition to getting out of the basin. We think, is a key part of our strategy. So as we go forward, it is an increase in growth optionality, flexibility, and access to those premium markets for the gas coming out of Permian. So hopefully that gives you a little bit of color on how we are thinking about strategy.
Theresa Chen: Thank you.
Maryann Mannen: You are welcome, Theresa.
Operator: Next question in the queue is from Jeremy Tonet with JPMorgan. Your line is open.
Jeremy Tonet: Hi, good morning.
Maryann Mannen: Good morning, Jeremy.
Jeremy Tonet: I was just wondering if you could expand a bit post the acquisition on your New Mexico strategy here. It is a bit in the handling that is needed with this production. But the growth is very strong as noted, and it seems like this toehold gives you even more opportunity there, and there are not too many players right now. So just wondering if you could talk a bit more on your New Mexico strategy and competitive backdrop.
Maryann Mannen: Yes, Jeremy, we would be happy to because I think you characterized it well. I think it is consistent really with the way that we think about growth. I am going to ask Greg to give you some incremental thoughts here.
Gregory Floerke: Thanks, Maryann. This is Jeremy. This is a really exciting area for us. We have been growing this space organically in terms of our processing plants and producers, our customers, acreage dedication starting on the Texas side of the line, but it has gradually expanded into Lea County, New Mexico. And even though our plants are right on the Texas side of that line, a lot of our growth has continued to be on the Lea County, New Mexico side. The growth is also in terms of crude oil production moved to the North and East towards that North-South New Mexico-Texas border. And that is because it is some of the best crude oil rock in the whole basin.
Particularly the Avalon formation, which is shallower, it is about 8,500 feet depth instead of 12,000, excuse me. So it is more economic to produce, it is higher IPs, it is lower gas oil ratio. So it is the most attractive economic crude production area. The issue is that gas comes with more CO2 and H2S. It is much more sour. And that really is what the Northwind developers recognized when they built that system. Some of our existing base customers have moved further to that side. And we have deployed treating throughout our system, particularly on the New Mexico side of our gathering system.
This acquisition is really going to augment our ability to treat even more sour gas and also provide blending opportunities because of the proximity and potential connectivity here. This system, if you look on a map, it wraps around the north and east side of our existing gathering system. So it really is adjacent and complementary as Maryann mentioned. So we think there will be more organic opportunities that can take advantage of this expanded treating capability and gathering that we have in one of the most attractive areas to drill in the basin.
Jeremy Tonet: Got it. That is helpful there. Maybe just continuing, do you see more bolt-on opportunities adjacent to your footprint that could offer the types of benefits that you see with Northwind's?
Gregory Floerke: If we were to build a system organically, the Northwind system would be one that we would have built. So in terms of looking for bolt-ons, I do not necessarily would say that there are opportunities there. We will always look for those if there is a strategic fit and make sense. But this one would have made sense as an organic build-out just as much as a bolt-on. And it happens to be that it is right next to our system, and it is right in the area where we see a lot of growth. So this accelerates our plans that probably organically we would have looked at.
Maryann Mannen: Jeremy, it is Maryann. I would say Greg has already said it, but at the risk of repeating, I will say we have tried to share with you. We think they are pretty compelling. Supported by the average contract life of thirteen years, over 200,000 dedicated acres in the Delaware. And none of the economics, when we talk about that roughly seven times multiple, reflect any upside from that. So we are pretty pleased with this. And we think it will continue to give us opportunities to grow beyond what we have been sharing with you here.
Jeremy Tonet: Got it. I will leave it there. Thank you.
Operator: And the final question in the queue is from Michael Blum with Wells Fargo. Your line is open.
Michael Blum: Thanks. Good morning, everyone. Apologies. One more clarification question on the Northwind deal. I guess as it relates to the gas and liquids that you will gain access to eventually, can you just clarify, will you be able to accommodate those incremental volumes on your existing planned NGL pipes, fracs, export docks, etcetera? Or would you need to add capacity? And if so, what type of investment will we be looking at?
Maryann Mannen: Good morning, Michael, and no problem. I am going to ask Kris to share his thoughts on your question.
Kris Hagedorn: Yes. Michael, what I would remind you of is that when we announced the Gulf Coast fractionators and related NGL value chain, we actually had full line of sight to filling those fracs and BANGL. So as we sit today, that value chain is full. So when we think about the 70 of liquids that comes with this, and I will say that the liquid side of this comes immediately. Those are incremental to the liquids that we already have access to. It does provide optionality, right, as we think about our existing NGL value chain as to how we do most economically utilize that value chain. So that is something I know the team has been looking at.
And, Shawn, I do not know if there was anything you might want to add.
Shawn Lyon: Yeah. Michael, this is Shawn. On top of what Kris just mentioned, as you know, earlier this year, Maryann mentioned earlier that we are at 250,000 barrels per day on Bengal, already this year with expansion in 2026 to go to 300,000. As Kris mentioned, that optionality beyond that will give us tremendous flexibility to continue to execute in our strategy. So we feel really good at the spot we are in. And we will continue looking to maximize the organic options that now Northwind will bring to us.
Michael Blum: Got it. Thanks for that. That is all I had today.
Maryann Mannen: You are welcome, Michael. Thank you.
Operator: With no further questions, I will turn the call back over to Kristina.
Kristina Kazarian: Thank you for your interest in MPLX. Should you have more questions or if you would like clarification on topics discussed this morning, please contact us, and our team will be available to take your calls. Thank you for joining us today.
Operator: This concludes today's call. Thank you for your participation. You may disconnect at this time.