MPLX LP

16. Derivative Financial Instruments

During the year ended December 31, 2024, MPLX entered into commodity contracts that were executed to manage price risk during 2024. All of those positions were settled during 2024, with the associated gains included in the table below. As of December 31, 2024, MPLX had no outstanding commodity contracts beyond the embedded derivative discussed below.

Embedded Derivative - MPLX has a natural gas purchase commitment embedded in a keep-whole processing agreement with a producer customer in the Southern Appalachia region expiring in December 2027. The customer has the unilateral option to extend the agreement forone five-year term through December 2032. For accounting purposes, the natural gas purchase commitment and the term extending option have been aggregated into a single compound embedded derivative. The probability of the customer exercising its option is determined based on assumptions about the customer’s potential business strategy decision points that may exist at the time they would elect whether to renew the contract. The changes in fair value of this compound embedded derivative are based on the difference between the contractual and index pricing, the probability of the producer customer exercising its option to extend, and the estimated favorability of these contracts compared to current market conditions. The changes in fair value are recorded in earnings through Purchased product costs in the Consolidated Statements of Income. For further information regarding the fair value measurement of derivative instruments, see Note 15. See Note 2 for a discussion of derivatives MPLX may use and the reasons for them. At December 31, 2024 and 2023, the estimated fair value of this contract was a liability of $58 million and $61 million, respectively.

As of December 31, 2024 and 2023, there were no derivative assets or liabilities that were offset in the Consolidated Balance Sheets.

The impact of MPLX’s derivative contracts not designated as hedging instruments and the location of gains and losses recognized in the Consolidated Statements of Income is summarized below: