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TheStreet Open House

MarkWest Energy Partners Reports Third Quarter Financial Results And Increases Common Unit Distribution By 11 Percent

Stocks in this article: MWE

“Our organic growth strategy continues to deliver solid financial results and significant opportunities for future expansion and capital investment,” said Frank Semple, Chairman, President and Chief Executive Officer. “MarkWest’s diverse set of assets and focus on delivering high quality customer service resulted in year over year volume increases of over 20% and 11% distribution growth. In addition, our ongoing development in the Marcellus Shale and the Utica Shale continues to provide critical midstream infrastructure for our producer customers’ drilling programs and provides a significant inventory of future growth projects.”

BUSINESS HIGHLIGHTS

Business Development

  • Liberty: In July 2012, the Partnership announced a new long-term, fee-based agreement with XTO Energy (XTO) to transport, fractionate and market natural gas liquids (NGLs) from their 125 million cubic feet per day (MMcf/d) processing plant located in Butler County, Pennsylvania. NGLs will initially be transported by truck from XTO’s plant to the Houston fractionation and marketing complex in Washington County, Pennsylvania. By the end of 2013, an extension of the Partnership’s NGL gathering pipeline into northwest Pennsylvania is expected to be complete, which will connect the Keystone complex and XTO facility to the Houston complex.In September 2012, the Partnership announced a 10-year agreement to become a firm shipper on the Mariner East pipeline project (“Mariner East”) subject to final regulatory approvals. Mariner East is currently designed to transport ethane and propane sourced at the Partnership’s Houston complex to Sunoco, Inc’s Marcus Hook facility located near Philadelphia, Pennsylvania. Once delivered, the ethane-propane mix will be re-fractionated into purity products for sale to domestic and international markets.During the third quarter, the Partnership continued to transport propane from the Houston fractionation complex to Marcus Hook for delivery to international markets. Since the commencement of propane exports in July 2012, the Partnership has marketed over 900,000 barrels. Total propane volumes loaded onto ships at Marcus Hook include the Partnership’s volume and purchased product sourced at Sunoco’s local-area facilities. The Partnership anticipates the continuation of exports from Marcus Hook as long as it is economically possible for our producer customers to capture premium prices that currently exist in the international markets.In October 2012, the Partnership commenced operations of the 200 MMcf/d Sherwood I processing facility and associated gathering and compression in Doddridge County, West Virginia. These assets are supported by a long-term, fee-based agreement with Antero Resources. The initiation of Sherwood operations represents the first phase of the Partnership’s development of midstream infrastructure in Doddridge County. The Partnership expects the Sherwood II facility, a 200 MMcf/d cryogenic processing plant, to be operational in the second quarter of 2013.In November 2012, the Partnership announced plans to further expand the processing capacity at its Mobley complex in Wetzel County, West Virginia by 200 MMcf/d. This expansion is supported by an existing long-term, fee-based agreement with EQT Corporation and is expected to be completed in the fourth quarter of 2013.
  • Utica: In November 2012, MarkWest Utica EMG, LLC (MarkWest Utica) a joint venture between MarkWest and The Energy and Minerals Group, announced the execution of definitive agreements with Antero Resources to provide gas processing, fractionation and marketing services in Noble County, Ohio. Under long-term, fee-based agreements, MarkWest Utica will initially bring online an interim 45 MMcf/d refrigeration processing plant at its Seneca processing complex, with an expected second quarter of 2013 completion date. This interim facility will be followed by Seneca I, a 200 MMcf/d cryogenic gas processing facility, which is expected to begin operations by the third quarter of 2013. The definitive agreements contemplate the construction of additional facility, Seneca II, a 200 MMcf/d cryogenic processing facility, which may be installed as soon as the end of 2013. In addition to its Seneca processing complex, MarkWest Utica will construct an NGL gathering system to its Cadiz processing complex and then on to the Harrison County, Ohio fractionation and marketing complex. The Cadiz complex will include a de-ethanization facility where purity ethane will be produced and delivered into the ATEX ethane pipeline. The propane and heavier natural gas liquids will then flow via pipeline to the Harrison County fractionator for further separation into purity products. The completion of the NGL gathering system and fractionation will provide Antero Resources direct market access to the planned ethane and propane pipeline projects in the northeast.
  • Northeast: In October 2012, the Partnership commenced operations of its 150 MMcf/d Langley processing plant expansion supporting producers’ gas development in the Huron/Berea Shale. This expansion increases the Partnership’s total processing capacity in the Northeast Segment to 655 MMcf/d and further expands the Partnership’s position as the largest natural gas processor in the Appalachian Basin.
  • Southwest: In September 2012, Centrahoma Processing, LLC a joint venture between MarkWest and Cardinal Midstream, LLC in Southeast Oklahoma agreed to construct a 120 MMcf/d processing plant expansion in order to support drilling programs in the Woodford Shale. The plant is expected to be operational in the fourth quarter of 2013.

Capital Markets

  • On August 10, 2012, the Partnership completed a public offering of $750 million aggregate principal amount of 5.5% senior unsecured notes due 2023 issued at 99.015% of par. The aggregate net proceeds of approximately $731 million were used to repay borrowings under the Partnership’s revolving credit facility, to partially fund the Partnership’s capital expenditure program and for other general partnership purposes.
  • On August 17, 2012, the Partnership completed a common unit equity offering of 6.9 million common units. The net proceeds of approximately $338 million were used to partially fund the Partnership’s capital expenditure program and for other general partnership purposes.

FINANCIAL RESULTS

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