Equity (Notes)

6 Months Ended

Jun. 30, 2019

We had 89,457,316 common public units and 600,000 6.875% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the “Preferred Units”) outstanding as of June 30, 2019. Additionally, Marathon owned 156,173,128 of our common units, constituting 64% ownership interest in us. Marathon also held 80,000 TexNew Mex units and all of the outstanding non-economic general partner units as of June 30, 2019. See Note 1 for further discussion of the treatment of our common units in connection with the MPLX Merger. In addition, in connection with the MPLX Merger, our Preferred Units were exchanged for Series B Preferred Units of MPLX and our TexNew Mex units were converted into a new class of units of MPLX with substantially equivalent rights, powers, duties and obligations as our TexNew Mex Units.

Changes to Equity (in millions)



	Three and Six Months Ended June 30, 2019
	Common			Preferred			Total
Balance at December 31, 2018	$	4,070		$	604		$	4,674
Distributions to common and preferred unitholders (a)	(240		)	(21		)	(261		)
Net earnings attributable to partners	147			10			157
Contributions (b)	19			—			19
Other	1			—			1
Balance at March 31, 2019	3,997			593			4,590
Distributions to common unitholders (a)	(241		)	—			(241		)
Net earnings attributable to partners	150			10			160
Contributions (b)	25			—			25
Balance at June 30, 2019	$	3,931		$	603		$	4,534



	Three and Six Months Ended June 30, 2018
	Equity of Predecessors (c)			Andeavor Logistics						Total
	Equity of Predecessors (c)			Common			Preferred			Total
Balance at December 31, 2017	$	1,292		$	2,925		$	589		$	4,806
Sponsor contributions of assets to the Predecessors	197			—			—			197
Loss attributable to the Predecessors	(8		)	—			—			(8		)
Distributions to common and preferred unitholders (a)	—			(205		)	(8		)	(213		)
Net earnings attributable to partners	—			125			14			139
Contributions (b)	—			16			—			16
Cumulative effect of accounting standard adoption	—			(22		)	—			(22		)
Other	—			—			(1		)	(1		)
Balance at March 31, 2018	1,481			2,839			594			4,914
Sponsor contributions of assets to the Predecessors	139			—			—			139
Loss attributable to the Predecessors	(16		)	—			—			(16		)
Distributions to common unitholders (a)	—			(206		)	—			(206		)
Net earnings attributable to partners	—			138			10			148
Contributions (b)	—			7			—			7
Other	—			1			—			1
Balance at June 30, 2018	$	1,604		$	2,779		$	604		$	4,987


(a)	Represents cash distributions declared and paid during the period.


(b)	Includes Marathon and TLGP contributions to us primarily related to reimbursements for capital spending pursuant predominantly to the Amended Omnibus Agreement and the Carson Assets Indemnity Agreement.


(c)	Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.

Cash Distributions

Our partnership agreement, as amended, sets forth the calculation to be used to determine the amount and priority of cash distributions that the limited partner unitholders will receive.

Quarterly Distributions on Common Units



Quarter Ended	Quarterly Distribution Per Common Unit		Total Cash Distribution (in millions)		Date of Distribution	Unitholders Record Date
December 31, 2018 (a)	$	1.03	$	238	February 14, 2019	February 5, 2019
March 31, 2019 (a)	1.03		240		May 15, 2019	May 9, 2019


(a)	This distribution is net of $12.5 million waived with respect to units held by our Sponsor and its affiliates for the three months ended March 31, 2019 and $15 million for the three months ended December 31, 2018. These distribution waivers were instituted in 2017 under the terms of our partnership agreement.

During the period from the execution of the MPLX Merger Agreement to the date that the MPLX Merger was consummated, we coordinated the record dates of our quarterly distributions with MPLX so that no holder of our common units received distributions from both us and MPLX or failed to receive one distribution. As a result of the record date of the MPLX distribution occurring after the MPLX Merger, we did not declare a distribution for the second quarter of 2019.

During the six months ended June 30, 2019 and 2018, we paid distributions of $21 million and $8 million, respectively, to holders of our Preferred Units. Distributions on the Preferred Units are payable semi-annually in arrears on the 15th day of February and August of each year. Due to the timing of the MPLX Merger, exchange of Preferred Units and the record dates discussed above, we did not declare a distribution associated with the Preferred Units for the first half of 2019.

Net Earnings per Unit

We use the two-class method when calculating the net earnings per unit applicable to limited partners, because we have more than one participating security. At June 30, 2019, our participating securities consisted of common units, Preferred Units and TexNew Mex units. Net earnings is allocated between the partners in accordance with our partnership agreement. We base our calculation of net earnings per unit on the weighted average number of common limited partner units outstanding during the period.

Diluted net earnings per unit include the effects of potentially dilutive units on our common units, which consist of unvested phantom units. Distributions less than or greater than earnings are allocated in accordance with our partnership agreement.

Net Earnings per Unit (in millions, except per unit amounts)



	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018 (a)			2019			2018 (a)
Net earnings	$	160	$	132		$	317		$	263
Distributions on Preferred Units (b)	—		(10		)	—			(20		)
Net earnings attributable to common units	160		122			317			243
Limited partners’ distributions on common units (c)	—		(209		)	(240		)	(414		)
Distributions on common units less (greater) than earnings	$	160	$	(87	)	$	77		$	(171	)
General partner’s earnings:
Allocation of distributions greater than earnings (d)	$	—	$	(16	)	$	—		$	(24	)
Total general partner’s loss	$	—	$	(16	)	$	—		$	(24	)
Limited partners’ earnings on common units:
Distributions (c)(e)	$	—	$	209		$	240		$	414
Allocation of distributions less (greater) than earnings	160		(71		)	77			(147		)
Total limited partners’ earnings on common units	$	160	$	138		$	317		$	267

Weighted average limited partner units outstanding:
Common units - basic	245.6		217.2			245.6			217.2
Common units - diluted (f)	245.7		217.3			245.7			217.3
Net earnings per limited partner unit: (g)
Common - basic	$	0.65	$	0.63		$	1.29		$	1.23
Common - diluted	$	0.65	$	0.63		$	1.29		$	1.23


(a)	Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.


(b)	The Preferred Units entitle unitholders to receive preferred distributions on a semi-annual basis. Due to the MPLX Merger, we did not declare a distribution for the first half of 2019.


(c)	We did not declare a distribution for the second quarter of 2019 due to the MPLX Merger.


(d)	We have revised the historical allocation of general partner earnings to include the Predecessors’ losses of $16 million and $24 million for the three and six months ended June 30, 2018, respectively.

(e)

Distributions of earnings for limited partners’ common units for the three months ended June 30, 2018 is net of a $15 million waiver and the six months ended June 30, 2019 and 2018 are net of a $12.5 million and $30 million waiver, respectively, from our Sponsor. There was no waiver for the three months ended June 30, 2019 because we did not declare a distribution for the second quarter of 2019 due to the MPLX Merger.


(f)	Diluted net earnings per unit include the effects of potentially dilutive units on our common units, which consist of unvested phantom units.

(g)

Amounts may not recalculate due to rounding of dollar and unit information.