What happened

Units of MPLX (NYSE:MPLX) plunged 16% in 2019, according to data provided by S&P Global Market Intelligence. The slump in the energy company's value stood out like a sore thumb given that the S&P 500 and the U.S. oil benchmark, WTI, rallied 29% and 34%, respectively, last year. 

Here's a look at why MPLX performed so poorly in what was an excellent year for most investors. 

A natural gas well with pipelines at sunset

Image source: Getty Images.

So what

Last year was a bit of a transitional one for MPLX. In May, the company agreed to acquire affiliated MLP Andeavor Logistics in a $14 billion transaction. Investors had been expecting the move ever since MPLX's parent, Marathon Petroleum (NYSE:MPC)bought Andeavor's former parent. While the deal made strategic sense, investors still worried that it would weigh on MPLX's financial metrics given Andeavor Logistics' weaker profile. 

One investor in particular has been pressuring Marathon to make changes given its underperformance since acquiring Andeavor. The company has started acting on those recommendations, including appointing a new CEO for MPLX. Meanwhile, the company is exploring several other strategic options to unlock value, including potentially spinning MPLX off from Marathon to create a fully independent company and converting it into a corporation. 

Investors have soured on the MLP structure due to its continued underperformance and tax complications, so MPLX is one of a shrinking number of them. Several converted into corporations last year, while others accepted buyout offers. MPLX has yet to decide if it will stick with the structure or become a corporation. That uncertainty has been weighing on the company, especially as MLP valuations continue to slump. 

Now what

MPLX's unit price declined sharply last year even though its cash flow per unit was up about 19% through the third quarter thanks to the acquisition of Andeavor Logistics and its organic expansion projects. Because of that, the MLP enters 2020 with a dirt-cheap valuation and a sky-high yield. That sets it up to potentially produce big-time total returns this year, making it a great pipeline stock to buy these days