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TheStreet Open House

MarkWest Energy Partners Reports Record Distributable Cash Flow And Full-Year Distribution Growth Of 12.6 Percent

“We are extremely pleased with our performance in 2012, which was highlighted by record distributable cash flow, our second consecutive year of double-digit distribution increases and 23 percent growth in processed volumes,” said Frank Semple, Chairman, President and Chief Executive Officer. “We have continued to build on our industry-leading position in the Marcellus Shale and as a result of our producer customers’ very successful drilling programs our fourth quarter year-over-year Liberty processed volumes increased by 86 percent. In addition, with our partner EMG, we have made enormous progress in the development of our full service integrated midstream platform to support the rapidly developing Utica Shale. In 2012 we invested almost $2 billion on strategic growth projects primarily in our Marcellus and Utica business units and in 2013 we expect to invest between $1.5 and $1.8 billion on additional capital projects, which are supported by long-term, largely fee-based contracts. Our diverse asset base and strategic position in some of the premier resource plays in the U.S. continues to provide us with significant growth opportunities. We are committed to provide our producer customers with fully-integrated midstream solutions and outstanding customer service.”

BUSINESS HIGHLIGHTS

Business Development

Liberty:

  • In October 2012, the Partnership commenced operations of the 200 million cubic feet per day (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 on-going development of midstream infrastructure in Doddridge County. The Partnership expects the Sherwood II and Sherwood III cryogenic processing plants, totaling 400 MMcf/d, to be operational in the second and third quarters of 2013, respectively.
  • 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 (NYSE: EQT) and is expected to be completed in the fourth quarter of 2013. Upon completion of the third facility, the Partnership’s total cryogenic processing capacity at Mobley will be 520 MMcf/d.
  • In December 2012, the Partnership commenced operations of the first Mobley processing facility. The 200 MMcf/d plant supports the development of rich-gas acreage in the Marcellus Shale by EQT Corporation, Magnum Hunter Resources Corporation (NYSE: MHR) and other producers.

Utica:

  • In November 2012, MarkWest Utica EMG, LLC (MarkWest Utica EMG) a joint venture between the Partnership and The Energy and Minerals Group (EMG), 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 EMG will construct two processing facilities totaling 400 MMcf/d at its Seneca complex. In addition to the Seneca processing complex, MarkWest Utica EMG will construct an NGL gathering system to the Cadiz processing complex and then on to the Hopedale fractionation and marketing complex in Harrison County, Ohio.
  • In November 2012, MarkWest Utica EMG completed its refrigeration facility at the Cadiz complex, which provides 60 MMcf/d of interim processing capacity to support rapidly expanding development of the Utica Shale. The completion of this facility is a significant milestone and is MarkWest Utica EMG’s first processing facility in the Utica Shale.
  • In February 2013, MarkWest Utica EMG announced the execution of definitive agreements with Rex Energy Corporation (NYSE: REXX) (Rex) to provide gathering, processing, fractionation, and marketing services in the Utica Shale. MarkWest Utica EMG expects to begin providing the full-suite of midstream services for Rex by June 1, 2013.
  • In February 2013, the Partnership, together with EMG, completed an Amended and Restated Limited Liability Company Agreement (Amended LLC Agreement) for MarkWest Utica EMG. The Amended LLC Agreement allows EMG to increase its capital investment in MarkWest Utica EMG from $500 million to $950 million. The transaction provides the Partnership with flexibility in the timing of future capital contributions to MarkWest Utica EMG and accelerates the continued development of critical midstream infrastructure in the highly prospective Utica Shale.

Northeast:

  • In October 2012, the Partnership commenced operations of its 150 MMcf/d Langley cryogenic 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 652 MMcf/d and further expands the Partnership’s position as the largest natural gas processor in the Appalachian Basin.

Southwest:

  • In November 2012, the Partnership completed its 120 MMcf/d Carthage East cryogenic processing plant, to support producers’ gas development in the liquids-rich Haynesville Shale. This expansion increases the Partnership’s total processing capacity in East Texas to 400 MMcf/d.

Capital Markets

  • On November 7, 2012, the Partnership filed a prospectus supplement for an at-the-market equity program with a total value of up to $600 million. This program allows, but does not require, the Partnership to issue common units from time to time. Through the year ended December 31, 2012 the Partnership offered 0.13 million common units. The net proceeds of approximately $6.3 million were used to fund the Partnership’s capital expenditure program and for general partnership purposes.
  • On November 19, 2012, the Partnership completed an equity offering of 9.8 million common units. The net proceeds of approximately $437.2 million were used to partially fund the Partnership’s capital expenditure program and for general partnership purposes.
  • On January 10, 2013, the Partnership completed a public offering of $1.0 billion of 4.50% senior unsecured notes priced at par due in 2023. A portion of the net proceeds of approximately $986.9 million, together with cash on hand resulting in part from recent equity offerings, was used to fund the redemption of all of its outstanding 8.75% senior notes due 2018, and a portion of its 6.50% senior notes due 2021 and 6.25% senior notes due 2022, with the balance of such proceeds to be used to fund the Partnership’s capital expenditure program and for general partnership purposes.

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