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MarkWest Energy Partners Reports Record Second Quarter Results And Announces Plans To Form A Joint Venture With Kinder Morgan To Support Northern Ohio Rich-Gas Development And NGL Pipeline To Gulf Coast

“Our full-service midstream model and commitment to delivering exceptional customer service continues to deliver record volumes and financial performance,” said Frank Semple, Chairman, President and Chief Executive Officer. “We are excited to announce new strategic opportunities and growth projects throughout our core operating areas, which continue to support the ongoing success of our producer customers.”

BUSINESS HIGHLIGHTS

Liberty:

  • In May 2013, the Partnership commenced operations of Majorsville III, a 200 million cubic feet per day (MMcf/d) processing facility in Marshall County, West Virginia. Majorsville III is supported by long-term, fee-based agreements with Consol Energy, Inc. (NYSE: CNX) (CNX) and Noble Energy, Inc. (NYSE: NBL). The facility will also provide additional processing capacity to Range Resources Corporation (NYSE: RRC) (Range), Chesapeake Energy Corporation (NYSE: CHK) (Chesapeake) and other producers prior to the completion of subsequent facilities. The total processing capacity of the Majorsville complex has increased to 470 MMcf/d.
  • In May 2013, the Partnership commenced operations of Sherwood II, a 200 MMcf/d processing facility in Doddridge County, West Virginia. Sherwood II is supported by long-term, fee-based agreements with Antero Resources (Antero). The total processing capacity at the Sherwood complex has increased to 400 MMcf/d.
  • In June 2013, the Partnership closed on the sale of a non-strategic, high-pressure gas gathering system in Doddridge County, West Virginia to Summit Midstream Partners, LP (NYSE: SMLP) for $207.9 million in cash, net of fees. Rich-gas gathered by this system is supported by a long-term, fee-based contract with an affiliate of Antero, and is dedicated to the Partnership for processing at the Sherwood complex.
  • In July 2013, the Partnership commenced operations of the Houston De-ethanizer, a 38,000 barrel per day (Bbl/d) fractionator that is producing purity ethane from Marcellus rich-gas production. The Houston De-ethanizer will initially support Mariner West, a joint project with Sunoco Logistics Partners, L.P. (NYSE: SXL) and in the future will support all the planned ethane takeaway pipeline projects.
  • Today, the Partnership is announcing an expansion of the Mobley Complex in Wetzel County, West Virginia to support EQT Corporation (EQT) and other producers’ rich-gas development. EQT has requested 145 MMcf/d of additional priority capacity at the Mobley complex. To support the increase in priority capacity, MarkWest will construct Mobley IV, a new 200 MMcf/d processing facility that is scheduled to begin operations by the first quarter of 2015. Upon completion of this facility, Mobley’s processing capacity will be 720 MMcf/d.
  • The Partnership is also announcing the development of additional fractionation facilities to support producers’ growing rich-gas production in the Marcellus Shale. By the first quarter of 2014, the Partnership will install de-ethanization and de-propanization units totaling 20,000 Bbl/d of capacity at the Keystone complex in Butler County, Pennsylvania. In addition, the Partnership will install a 38,000 Bbl/d de-ethanization facility at the Sherwood complex in Doddridge County, West Virginia, which is expected to be operational during the first quarter of 2015.

Utica:

  • In May 2013, MarkWest Utica EMG executed definitive agreements with CNX and two additional producers to provide processing, fractionation, and marketing services in the Utica Shale.
  • In May 2013, MarkWest Utica EMG commenced operations of Cadiz I, a 125 MMcf/d cryogenic processing facility in Harrison County, Ohio. Cadiz I is supported by fee-based agreements with Gulfport Energy Corporation (NASDAQ: GPOR), Antero and other producers.
  • In June 2013, MarkWest Utica EMG executed definitive agreements with Antero for the development of Seneca III, a 200 MMcf/d processing facility in Noble County, Ohio. Seneca III is scheduled to be operational during the second quarter of 2014 and will support rich-gas production from Antero and other producers in the southern core area of the Utica Shale.
  • Today, MarkWest Utica EMG is announcing installation of a 38,000 Bbl/d de-ethanization facility at the Seneca complex, which is expected to be operational as soon as the fourth quarter of 2014.
  • Today, MarkWest Utica EMG announced plans to form a Joint Venture (JV) with Kinder Morgan Energy Partners, LP (NYSE: KMP) (Kinder Morgan) to pursue three critical new projects to support producers in the Utica and Marcellus Shales:
  • Under the first joint project, Kinder Morgan and MarkWest Utica EMG would develop a processing complex to be constructed on Kinder Morgan’s existing 220-acre site in Tuscarawas County, Ohio (JV processing complex) with an initial processing capacity of 200 MMcf/d, expandable to 400 MMcf/d of processing capacity. In addition, Kinder Morgan would convert a 65-mile segment of its existing 26-inch Tennessee Gas Pipeline into rich-gas gathering service. MarkWest Utica EMG would also construct additional rich-gas and NGL pipelines to connect the complex with its large-scale full-service midstream infrastructure. This project would serve new customers in Carroll, Columbiana, Mahoning and Trumbull counties in northern Ohio. The JV would own the processing complex on a 50-50 basis.
  • The second joint project with Kinder Morgan would involve the development of a 200,000 Bbl/d C2+ NGL pipeline originating at the JV processing complex to Gulf Coast fractionation facilities. This would be accomplished through the conversion of over 900 miles of existing Kinder Morgan pipeline assets and the construction of approximately 200 miles of additional pipeline to connect to Gulf Coast liquids and fractionation infrastructure. The NGL pipeline would be expandable to 400,000 Bbl/d. Subject to sufficient shipper commitments, permitting and all related regulatory approvals, the pipeline would be operational during the fourth quarter of 2015. The Partnership and MarkWest Utica EMG would utilize their extensive NGL pipeline network to deliver NGLs from the Marcellus and Utica to the new NGL pipeline. By converting over 900 miles of existing pipeline and utilizing the Partnership and MarkWest Utica EMG’s existing NGL network, the JV’s NGL pipeline solution is best positioned to provide a cost effective outlet from the Utica and Marcellus Shale plays to Gulf Coast area markets. Kinder Morgan would own at least 75 percent of the NGL pipeline and MarkWest Utica EMG would have the option to invest up to 25 percent.
  • The third joint project with Kinder Morgan would involve the development of new fractionation facilities, as well as utilizing third-party fractionation facilities, throughout the Gulf Coast.

Southwest:

  • In May 2013, the Partnership acquired midstream assets in the Texas Panhandle and Western Oklahoma from a wholly owned subsidiary of Chesapeake for consideration of $225.2 million in cash (Granite Wash Acquisition). In conjunction with the acquisition, the Partnership executed long-term, fee-based agreements with Chesapeake for gas gathering and processing services. As part of the fee-based gas processing agreement, Chesapeake has dedicated to the Partnership approximately 130,000 acres throughout the Anadarko Basin.
  • In May 2013, the Partnership executed a long-term fee-based agreement with Newfield Exploration (NYSE: NFX) (Newfield) to develop rich-gas gathering facilities in the Eagle Ford Shale. The Partnership will construct gathering pipelines, field compression, and liquids storage to support production from Newfield’s West Asherton project in Dimmit County, Texas.

Capital Markets

  • During the second quarter of 2013, the Partnership offered 3.8 million units and received net proceeds of approximately $244.5 million under the continuous offering program that was launched in the fourth quarter of 2012. The Partnership completed the $600 million program in July 2013.

FINANCIAL RESULTS

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