The assets targeted for the drop down will be with around $1.4 billion of annual earnings to the master limited partnership of MPC, MPLX LP
Coming ahead of OPEC’s meeting in Vienna two months back, leading to rise in oil and gas prices, many companies in the energy sector have unfolded their long-awaited plans.
Similar is the case with Marathon Petroleum Corp. (NYSE:MPC) that has recently announced plans to fast pace its asset drop down program. The latest move comes after the Elliott Management Corp., hedge fund came forth with its doubts over the company. Back in November, the hedge fund dispatched its concerns in a letter to the energy company advising it to break up.
Not only the acceleration of asset drop down deals, but the company also aims to strategically review its Speedway. The assets targeted for the drop down will be with around $1.4 billion of annual earnings before taking into account interests, depreciation and amortization charges and taxes to the master limited partnership of MPC, MPLX LP.
MPLX LP is formed by Marathon Petroleum for the procurement, development, and operations of the midstream properties. No exact dates for the drop down deals have yet been announced however the company as stated that it will take place “as soon as practicable.” As per the company’s estimates the asset drop down deal will happen in 2017 only.
For the purpose of this transaction, the company has formed a special committee of the board that would carry out the strategic review of the Speedway properties. Speedway happens to be one of the leading brands of MPC, under which several gas stations and convenience stores come in.
Gary Heminger, Chairman of Marathon Petroleum, stated that the public market speculations have a major role to play in the undervaluation of the company and that the post latest move, the crude oil company will be able to preserve investor confidence in MPC. Elliott Management has also expressed its contention over the company’s latest move.