Investments and Noncontrolling Interests

The following table presents MPLX’s equity method investments at the dates indicated:



	Ownership as of	Carrying value at
	December 31,	December 31,
(In millions, except ownership percentages)	2018	2018		2017
Explorer	25%	90		89
Illinois Extension Pipeline	35%	275		284
LOCAP	59%	27		24
LOOP	41%	226		225
MarEn Bakken	25%	498		520
Centrahoma Processing LLC	40%	160		121
MarkWest EMG Jefferson Dry Gas Gathering Company, L.L.C.	67%	236		164
MarkWest Utica EMG, L.L.C.	56%	2,039		2,139
Sherwood Midstream LLC	50%	366		236
Sherwood Midstream Holdings LLC	60%	157		165
Other		100		43
Total		$	4,174	$	4,010

Summarized financial information for MPLX’s equity method investments for the years ended December 31, 2018, 2017 and 2016 is as follows:



	December 31, 2018
(In millions)	MarkWest Utica EMG, L.L.C.			Other VIEs		Non-VIEs		Total
Revenues and other income	$	238		$	234	$	1,364	$	1,836
Costs and expenses	184			95		709		988
Income from operations	54			139		655		848
Net income	53			139		584		776
(Loss)/income from equity method investments⁽¹⁾	$	(10	)	$	74	$	176	$	240



	December 31, 2017
(In millions)	MarkWest Utica EMG, L.L.C.		Other VIEs		Non-VIEs		Total
Revenues and other income	$	187	$	86	$	954	$	1,227
Costs and expenses	97		42		520		659
Income from operations	90		44		434		568
Net income	90		43		345		478
Income from equity method investments⁽¹⁾	$	10	$	20	$	48	$	78



	December 31, 2016
(In millions)	MarkWest Utica EMG, L.L.C.		Other VIEs⁽²⁾			Non-VIEs		Total
Revenues and other income	$	216	$	18		$	148	$	382
Costs and expenses	100		111			117		328
Income/(loss) from operations	116		(93		)	31		54
Net income/(loss)	114		(93		)	31		52
Income/(loss) from equity method investments⁽¹⁾	$	8	$	(89	)	$	7	$	(74	)


(1)	“Income/(loss) from equity method investments” includes the impact of any basis differential amortization or accretion.


(2)	Includes an impairment charge of $89 million for the year ended December 31, 2016 related to MPLX’s investment in Ohio Condensate Company, L.L.C., which does not appear separately in this table.

Summarized balance sheet information for MPLX’s equity method investments as of December 31, 2018 and 2017 is as follows:



	December 31, 2018
(In millions)	MarkWest Utica EMG, L.L.C. ⁽¹⁾		Other VIEs		Non-VIEs		Total
Current assets	$	82	$	153	$	379	$	614
Noncurrent assets	1,939		1,596		4,715		8,250
Current liabilities	28		127		246		401
Noncurrent liabilities	$	3	$	186	$	841	$	1,030



	December 31, 2017
(In millions)	MarkWest Utica EMG, L.L.C. ⁽¹⁾		Other VIEs		Non-VIEs		Total
Current assets	$	65	$	46	$	399	$	510
Noncurrent assets	2,077		930		4,624		7,631
Current liabilities	39		44		220		303
Noncurrent liabilities	$	3	$	11	$	904	$	918


(1)	MarkWest Utica EMG, L.L.C (“MarkWest Utica EMG”), noncurrent assets include its investment in its subsidiary Ohio Gathering Company, L.L.C. (“Ohio Gathering”), which does not appear elsewhere in this table. The investment was $750 million and $790 million as of December 31, 2018 and 2017, respectively.

As of December 31, 2018 and 2017, the carrying value of MPLX’s equity method investments exceeded the underlying net assets of its investees by $1.0 billion for the G&P segment. As of December 31, 2018 and 2017, the carrying value of MPLX’s equity method investments in the L&S segment exceeded the underlying net assets of its investees by $114 million and $118 million, respectively. This basis difference is being amortized into net income over the remaining estimated useful lives of the underlying net assets, except for $459 million and $39 million of excess related to goodwill for the G&P and L&S segments, respectively.

MarkWest Utica EMG

Effective January 1, 2012, MarkWest Utica Operating Company, L.L.C. (“Utica Operating”), a wholly-owned and consolidated subsidiary of MPLX, and EMG Utica, LLC (“EMG Utica” and together with Utica Operating, the “Members”) executed agreements to form a joint venture, MarkWest Utica EMG, to develop significant natural gas gathering, processing and NGL fractionation, transportation and marketing infrastructure in eastern Ohio. The related limited liability company agreement has been amended from time to time (the limited liability company agreement currently in effect is referred to as the “Amended LLC Agreement”). The aggregate funding commitment of EMG Utica was $950 million. Thereafter, Utica Operating was required to fund, as needed, 100 percent of future capital for MarkWest Utica EMG until the aggregate capital that had been contributed by the Members reached $2.0 billion, which occurred prior to the MarkWest Merger. Until such time as the investment balances of Utica Operating and EMG Utica are in the ratio of 70 percent and 30 percent, respectively (such time being referred to as the “Second Equalization Date”), EMG Utica will have the right, but not the obligation, to fund up to ten percent of each capital call for MarkWest Utica EMG, and Utica Operating will be required to fund all remaining capital not elected to be funded by EMG Utica. After the Second Equalization Date, Utica Operating and EMG Utica will have the right, but not the obligation, to fund their pro rata portion (based on their respective investment balances) of any additional required capital and may also fund additional capital that the other party elects not to fund. As of December 31, 2018, EMG Utica has contributed approximately $1.2 billion and Utica Operating has contributed approximately $1.5 billion to MarkWest Utica EMG.

Under the Amended LLC Agreement, prior to December 31, 2016, EMG Utica’s investment balance was increased by a quarterly special non-cash allocation of income (“Preference Amount”) calculated based upon the amount of capital contributed by EMG Utica in excess of $500 million. After December 31, 2016, no Preference Amount will accrue to EMG Utica’s investment balance. EMG Utica received a Preference Amount totaling approximately $16 million for the year ended December 31, 2016.

Under the Amended LLC Agreement, after December 31, 2016, cash generated by MarkWest Utica EMG that is available for distribution will be allocated to the Members in proportion to their respective investment balances. As of December 31, 2018, Utica Operating’s investment balance in MarkWest Utica EMG was approximately 56 percent.

MarkWest Utica EMG is deemed to be a VIE. Utica Operating is not deemed to be the primary beneficiary, due to EMG Utica’s voting rights on significant matters. MPLX’s maximum exposure to loss as a result of its involvement with MarkWest Utica EMG includes its equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of its compensation received for the performance of the operating services. MPLX did not provide any financial support to MarkWest Utica EMG that it was not contractually obligated to provide during the years ended December 31, 2018, 2017 and 2016. MPLX receives management fee revenue for engineering and construction and administrative services for operating MarkWest Utica EMG, and is also reimbursed for personnel services (“Operational Service revenue”). Operational Service revenue is reported as “Other income - related parties” on the Consolidated Statements of Income. The amount of Operational Service revenue related to MarkWest Utica EMG for the years ended December 31, 2018, 2017 and 2016 totaled $17 million, $17 million and $16 million, respectively.

Ohio Gathering

Ohio Gathering is a subsidiary of MarkWest Utica EMG and is engaged in providing natural gas gathering services in the Utica Shale in eastern Ohio. Ohio Gathering is a joint venture between MarkWest Utica EMG and Summit Midstream Partners, LLC. As of December 31, 2018, MPLX had an approximate 34 percent indirect ownership interest in Ohio Gathering. As Ohio Gathering is a subsidiary of MarkWest Utica EMG, which is accounted for as an equity method investment, MPLX reports its portion of Ohio Gathering’s net assets as a component of its investment in MarkWest Utica EMG. MPLX receives Operational Service revenue for operating Ohio Gathering which is reported as “Other income-related parties” on the Consolidated Statements of Income. The amount of Operational Service revenue related to Ohio Gathering for the years ended December 31, 2018, 2017 and 2016 totaled $16 million, $16 million and $15 million, respectively.

Sherwood Midstream

Effective January 1, 2017, MarkWest Liberty Midstream & Resources, L.L.C. (“MarkWest Liberty Midstream”), a wholly-owned and consolidated subsidiary of MPLX LP, and Antero Midstream Partners LP (“Antero Midstream”) formed a joint venture, Sherwood Midstream LLC (“Sherwood Midstream”), to support Antero Resources Corporation’s (“Antero Resources”) development in the Marcellus Shale. MarkWest Liberty Midstream has a 50 percent ownership interest in Sherwood Midstream. Pursuant to the terms of the related limited liability company agreement (the “LLC Agreement”), MarkWest Liberty Midstream contributed assets then under construction with a fair value of approximately $134 million and cash of approximately $20 million. Antero Midstream made an initial capital contribution of approximately $154 million.

Also effective January 1, 2017, MarkWest Liberty Midstream converted all of its ownership interests in MarkWest Ohio Fractionation Company, L.L.C. (“Ohio Fractionation”), a previously wholly-owned subsidiary, to Class A Interests and amended its LLC Agreement to create Class B-3 Interests, which were sold to Sherwood Midstream for $126 million in cash. The Class B-3 Interests provide Sherwood Midstream with the right to fractionation revenue and the obligation to pay expenses related to 20 mbpd of capacity in the Hopedale 3 fractionator. Sherwood Midstream accounts for its investment in Ohio Fractionation, which is a VIE, as an equity method investment as Sherwood Midstream does not control Ohio Fractionation. MarkWest Liberty Midstream has been deemed to be the primary beneficiary of Ohio Fractionation because it has control over the decisions that could significantly impact its financial performance, and as a result, consolidates Ohio Fractionation. The carrying amounts of assets and liabilities included on MPLX’s Consolidated Balance Sheets pertaining to Ohio Fractionation at December 31, 2018, were current assets of $132 million, non-current assets of $550 million, current liabilities of $75 million and $1 million of non-current liabilities. The creditors of Ohio Fractionation do not have recourse to MPLX LP’s general credit through guarantees or other financial arrangements. The assets of Ohio Fractionation are the property of Ohio Fractionation and cannot be used to satisfy the obligations of MPLX LP. Sherwood Midstream’s interests are reflected in “Net income attributable to noncontrolling interests” on the Consolidated Statements of Income and “Noncontrolling interests” on the Consolidated Balance Sheets.

Under the LLC Agreement, cash generated by Sherwood Midstream that is available for distribution will be allocated to the members in proportion to their respective investment balances.

Sherwood Midstream is deemed to be a VIE. MarkWest Liberty Midstream is not deemed to be the primary beneficiary, due to Antero Midstream’s voting rights on significant matters. MPLX’s maximum exposure to loss as a result of its involvement with Sherwood Midstream includes its equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of its compensation received for the performance of the operating services. MPLX did not provide any financial support to Sherwood Midstream that it was not contractually obligated to provide during the years ended December 31, 2018 and 2017. MPLX receives Operational Service revenue for operating Sherwood Midstream. The amount of Operational Service revenue related to Sherwood Midstream for the years ended December 31, 2018 and 2017 totaled approximately $12 million and $8 million, respectively, and is reported as “Other income-related parties” on the Consolidated Statements of Income.

Sherwood Midstream Holdings

Effective January 1, 2017, MarkWest Liberty Midstream and Sherwood Midstream formed a joint venture, Sherwood Midstream Holdings LLC (“Sherwood Midstream Holdings”), for the purpose of owning, operating and maintaining all of the shared assets that support the operations of the gas plants and other assets owned by Sherwood Midstream and the gas plants and de-ethanization facilities owned by MarkWest Liberty Midstream. MarkWest Liberty Midstream initially contributed certain real property, equipment and facilities with a fair value of approximately $209 million to Sherwood Midstream Holdings in exchange for a 79 percent initial ownership interest. Sherwood Midstream contributed cash of approximately $44 million to Sherwood Midstream Holdings in exchange for a 21 percent ownership interest. During the second quarter ended June 30, 2017, true-ups to the initial contributions were finalized. MarkWest Liberty Midstream contributed certain additional real property, equipment and facilities with a fair value of approximately $10 million to Sherwood Midstream Holdings and Sherwood Midstream contributed cash of approximately $4 million to Sherwood Midstream Holdings. Collectively, the real property, equipment, facilities and cash initially contributed, or that may be subsequently constructed by or contributed, to Sherwood Midstream Holdings are referred to as the “Shared Assets.” The net book value of the contributed assets was approximately $203 million. The contribution was determined to be an in-substance sale of real estate. As such, MPLX only recognized a gain for the portion attributable to Antero Midstream’s indirect interest of approximately $2 million, included in “Other income” on the Consolidated Statements of Income. MarkWest Liberty Midstream’s portion of the gain attributable to its direct and indirect interests of approximately $14 million is included in its investment in Sherwood Midstream Holdings and is reported under the caption “Equity method investments” on the Consolidated Balance Sheets. In connection with the initial contributions, MarkWest Liberty Midstream received a special distribution of approximately $45 million. During the year ended December 31, 2018, MarkWest Liberty Midstream sold to Sherwood Midstream six percent of its equity ownership in Sherwood Midstream Holdings for $15 million.

MarkWest Liberty Midstream’s and Sherwood Midstream’s ownership interests in Sherwood Midstream Holdings will fluctuate over time. As new Shared Assets are constructed, the members will make additional capital contributions to Sherwood Midstream Holdings. The amount that each member must contribute will be based on the expected utilization of the Shared Assets, as defined in the LLC Agreement. Pursuant to the terms of the LLC Agreement, MarkWest Liberty Midstream will serve as the operator for Sherwood Midstream Holdings.

MPLX accounts for Sherwood Midstream Holdings, which is a VIE, as an equity method investment as Sherwood Midstream is considered to be the general partner and controls all decisions. MPLX’s maximum exposure to loss as a result of its involvement with Sherwood Midstream Holdings includes its equity investment, any additional capital contribution commitments and any operating expenses incurred by the subsidiary operator in excess of its compensation received for the performance of operating services. MPLX did not provide any financial support to Sherwood Midstream Holdings that it was not contractually obligated to provide during the years ended December 31, 2018 and 2017.

Sherwood Midstream has been deemed the primary beneficiary of Sherwood Midstream Holdings due to its controlling financial interest through its authority to manage the joint venture. As a result, Sherwood Midstream consolidates Sherwood Midstream Holdings. Therefore, MPLX also reports its portion of Sherwood Midstream Holdings’ net assets as a component of its investment in Sherwood Midstream. As of December 31, 2018, MPLX has a 20.2 percent indirect ownership interest in Sherwood Midstream Holdings through Sherwood Midstream.