MPLX LP
For the period ended Mar 31, 2026. Filed May 5, 2026.
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Mar 31, 2026 · Filed May 5, 2026
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11. Derivatives
- Derivatives
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 10.
Related Party Derivatives - MPLX has derivative positions with MPC to partially hedge its direct exposure to commodity price risk in its Natural Gas and NGL Services segment. Changes in the fair value of the derivatives are based on changes in forward price curves for the underlying commodity and recognized in earnings through Product sales and Service revenue - product related, in the Consolidated Statements of Income.
The following table presents the fair value of derivative instruments as of March 31, 2026 and December 31, 2025, and the line items in the Consolidated Balance Sheets in which the fair values are reflected. As of March 31, 2026 and December 31, 2025, there were no derivative assets or liabilities that were offset in the Consolidated Balance Sheets.
| (In millions) | March 31, 2026 | December 31, 2025 |
|---|---|---|
| Commodity derivatives | ||
| Current liabilities - related parties | $51 | $— |
| Other current liabilities(1) | 11 | 6 |
| Other long-term liabilities(1) | 43 | 35 |
(1)Includes embedded derivatives.
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:
| Three Months Ended March 31, | ||
|---|---|---|
| (In millions) | 2026 | 2025 |
| Product sales | ||
| Realized loss | $(1) | $— |
| Unrealized loss | (7) | — |
| Product sales derivative loss | (8) | — |
| Service revenue - product related | ||
| Realized loss | (4) | — |
| Unrealized loss | (44) | — |
| Service revenue - product related loss | (48) | — |
| Purchased product costs | ||
| Realized loss | (2) | (3) |
| Unrealized loss | (13) | (4) |
| Purchased product cost derivative loss | (15) | (7) |
| Total derivative gain/(loss) included in Net income | $(71) | $(7) |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.