Gregory Floerke: Yes. This is Greg. The Utica is an area that had strong growth early on, along with the Marcellus and then some of the rigs moved from there more of the Marcellus now with sustainable crude prices and good levels. That’s driven better prices for condensate and for the light oil in the western portion of the Utica window. So we are seeing more activity there and even new producers moving into the area and leasing acreage and starting to make plans. So we’re excited to start to see some growth again in the Utica and volumes pick up there. And as Mike said, we’ve got capacity now that we can grow into by connecting pads and we essentially already have the gathering system and the processing capacity there to handle that.
Bharath Reddy: Got it. That’s helpful. And I think previously discussed Capline as a potential midstream asset within the MPC portfolio that could kind of be dropped down. So just curious on updated thoughts on how MPC could drop down interest in remaining logistics assets?
John Quaid: Yes, it’s John. I’ll take that. We’ve kind of said, look, we’ve got some assets, whether it’s Capline, Gray Oak, as some other midstream-type assets that are up on the sponsor’s balance sheet. I think right now, we’re kind of – we can save those for a rainy day, not something that’s really on the front burner for us, but it certainly gives us some optionality looking out into the future.
Bharath Reddy: Great. Thanks.
John Quaid: You’re welcome.
Operator: Our next question will come from Keith Stanley with Wolfe Research. You may proceed.
Keith Stanley: Hi. Good morning. Two follow-up questions. First, on the Permian. Are you considering larger opportunities at all to expand the value chain further downstream? Or do you think your strategy will stay focused on processing plants and pipelines?
John Quaid: No, no, great question, Keith. I appreciate it. We’ve said, look, we’ll continue to look at where we might be able to participate up and down that whole value chain. Certainly, to date, right, it’s been on the processing side and then the takeaway capacity. But we like participating in that, and if there’s more opportunities to touch the molecule along that chain. That’s something we can certainly consider and take a look at.
Keith Stanley: Great. Second one, just on the distribution, just to clarify, is there an ultimate level of kind of long-term cash flow coverage you would look at? Or any other metric that you think could help investors think about multiyear distribution growth relative to the growth you expect in the underlying business?
John Quaid: No, it’s a great question, Keith. I appreciate it. I mean it’s one, we haven’t given a framework. We’ve talked more conceptually about it. You heard Mike talk a little bit about red bar and blue bar cash flows. So we really dig into our results to understand what’s that year in and year out stable cash flow that we call blue bar when we think about where the distribution is and where we might want to head. I would just say, I think we’ve got ample capacity there as we look forward to manage that. And again, we want to continue to keep growing the cash flows at kind of that plus or minus mid-single digits as well, which should drive an opportunity around distribution growth.
Michael Hennigan: Keith, it’s Mike. I’ll repeat what I said earlier a little bit as I think about it from an investor standpoint, what type of return is the investor getting if they invest in us. So – so I look at our – where we’re going to trade from a yield standpoint. Again, we personally think we should trade a little lower in yield, but the market has kept us around that around 9% or so, somewhere in that range. And then we look at the growth and try and put ourselves in a position that we offer the market a good total return opportunity. So that’s the way I think about it long term. We kind of evaluate where the market is going to trade us. We think out in time as to where that distribution needs to be to be one part of the equation.
We think of how much cash flows need to grow to be part of that equation. And then we kind of manage it across time, if that makes sense to you. And kind of like people have asked earlier, we didn’t set out to have $1 billion of cash on the balance sheet. That wasn’t a stated goal. It’s kind of the way the market has played out for us. We’re not opposed to it. Financial flexibility is not a bad thing. It’s just the way it’s played out that we haven’t gotten to deploy some of the repurchasing that we would have liked up until this point. And like I said, we have more capacity on the blue side, but we want to make sure investors see it as a better long-term investment.
Keith Stanley: Got it. Thank you.
Michael Hennigan: You’re welcome.
Operator: [Operator Instructions] Our next question will come from Michael Blum with Wells Fargo. Your line is open.
Michael Blum: Thanks. Good morning, everyone. I just had two quick questions really. One, I’m sure you’re aware there’s been many NGL pipeline expansion announcements out of the Permian. So just can you remind us if your – the BANGL expansion is contracted? And second question is in the L&S segment. You had a big increase in the average pipeline tariff year-over-year 13%. How much of that was just driven by the inflation escalators? Or are there other factors contributing to that really big increase? Thanks.
Michael Hennigan: Hey. Michael, good morning. Thanks for the questions. I’ll maybe take the first one and then pass it over to Shawn. So when you think about BANGL, we certainly have dedications to that line, but right, you’re not going to have commitments on a natural gas liquids line. But we do look and see, you can kind of imply those same producers do have commitments, for example, on natural gas takeaway lines. So we know they’re committed there. It gives us some comfort on how the volume might flow through BANGL. But typical with NGL lines, right, it’s dedications not commitments. And I’ll leave it – turn it to Shawn for the first question.
Shawn Lyon: Hey, Michael, this is Sean. Thanks for the question. Really, if you look at our average tariff pipeline average pipeline tariff, it’s around the 13%. It just so happens that, that’s exactly the FERC rate that we announced – that FERC announced July 1. But that just happens to be the same right there. It’s really due to the tariff mix that it just happens on the pipelines that we use the most on our increased throughput that helped drive that. The other piece I would say that is something that we try to make sure that people are aware of FERC-directed – directly FERC tied to our assets. It’s only about 20% of our overall NPLX EBITDA is tied to the FERC index there. So hopefully, that gives you a little more color on your question there as far as the FERC rate there.
