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Initially, MPLX, which owns, operates, develops and acquires crude oil, refined products and other hydrocarbon-based product pipelines and other assets, originally stated it would sell 15 million units for $19 to $21 per unit. However, with public demand exceeding the 15 million threshold, MPLX, which was spun off by Marathon Petroleum Corp. -- parent of convenience store operator Speedway LLC -- offered more shares at a high price.
Public demand for MPLX has not waned since it began trading this morning either. The master limited partnership (MLP) saw its units instantly rise to $26 each. In late morning trade, MPLX units trade even higher -- $26.50 each -- a 20-percent increase vs. the IPO price.
In addition to the IPO, the underwriters of the transaction, which includes UBS Investment Bank, BofA Merrill Lynch, Morgan Stanley, Citigroup and J.P. Morgan, now have a 30-day window to purchase an additional 2.595 million units of MPLX. If the underwriters exercise that option in full, the public and underwriters will own a combined 26.4 percent stake in MPLX.
To qualify for MLP status, a partnership must generate at least 90 percent of its income from what the Internal Revenue Service (IRS) deems "qualifying" sources. Those qualifying sources include activities related to the production, processing or transportation of oil, natural gas and coal.
Speedway is not part of the IPO and will remain under Marathon Petroleum's umbrella.