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» MarkWest Energy Partners LP's CEO Discusses Q3 2011 Results - Earnings Call Transcript
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And with that, I'll turn the call over to Frank Semple, our Chairman, President and CEO.Frank M. Semple Good afternoon, and thanks to everyone for joining us on the call today. As indicated in our earnings release, we finished the year with another record quarter, and we continue to experience strong growth and financial performance from our diverse set of high-quality midstream assets. Throughout 2011, we saw significant ramp-up in cash flow and distribution growth, which is the direct result of more than $2 billion of strategic investments. These investments were made during the past few years to provide critical infrastructure required by our producer customers to develop their liquids-rich acreage. We also continue to strengthen our balance sheet and liquidity and are in a great position to aggressively develop additional growth opportunities in some of the best resource plays in the U.S. During the call today, I'll discuss our financial performance and provide a commercial and operational update, including more details on our recently announced Marcellus expansions and our Utica development plans. Finally, I'll review our balance sheet and discuss our 2012 guidance, and then we'll respond to your questions. Beginning first with a high-level overview of our financial performance, we achieved record distributable cash flow of $88 million during the fourth quarter, an increase of nearly 30% compared to the fourth quarter of 2010. Adjusted EBITDA was a record $128 million and segment operating income was $171 million. In January, we announced a fourth quarter distribution of $0.76 per common unit, an increase of 17% compared to the fourth quarter of 2010, while maintaining a strong distribution coverage ratio of 1.2x for the quarter. It's worth pointing out that the strong coverage ratio included coverage for the issuance of more than 16 million units in the fourth quarter to fund our growth capital projects and the acquisition of the 49% of the Liberty joint venture.
For the full year 2011, which does not include the 49% of the Liberty joint venture that we acquired at year end, DCF was $333 million, an increase of nearly 40% compared to 2010. And adjusted EBITDA for the year was $451 million, a year-over-year increase of 36%. DCF per unit grew 23% in 2011 compared to 2010, and we maintained a coverage ratio of 1.38x for the full year. This is obviously great financial performance and as you will hear, we are not slowing down in 2012.Now moving to the operational update. Let me begin with our Southwest business unit, which includes our operations in Texas and Oklahoma and contributed nearly 60% for a total segment operating income in the fourth quarter and the full year. Our consolidated basis, our gathering volumes in the Southwest segment increased approximately 2% year-over-year, driven primarily by a 24% increase in rich gas volumes in the Granite Wash, which was offset by slight decreases in Southeast Oklahoma. During 2011, we commenced operation of a "75 million cubic feet per day" expansion at our Arapaho processing complex to support the growth in liquids-rich volumes from the Granite Wash. Our total processing capacity in Western Oklahoma is now 235 million cubic feet per day. And we're currently operating near capacity. The Granite Wash continues to be a very economic play and we continue to evaluate additional opportunities for gathering and processing expansions in Western Oklahoma and the panhandle of Texas. In Southeast Oklahoma, our gathered volumes remained strong at more than 500 million cubic feet per day, and our processed volumes year-to-date are greater than 100 million cubic feet per day. The volume of gas that we process in Southeast Oklahoma increased by nearly 30% compared to 2010, which continues to provide a healthy uplift in operating margin.
There are tremendous reserves yet to be drilled in the unconventional plays in which we operate in Oklahoma, and we continue to be ideally positioned to further expand our presence in the Southwest. While certain producers have indicated that they are reducing their drilling programs, we have been a very successful in executing agreements with new producer customers and connecting new wells for existing consumers. Overall, we believe our volumes in Oklahoma will increase modestly in 2012.Read the rest of this transcript for free on seekingalpha.com