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Ohio Utica Shale

MarkWest Energy releases first quarter 2014 results

By Bob Downing Published: May 8, 2014

From MarkWest Energy:

 

 

Placed into service three major infrastructure projects, including a 200 MMcf/d processing plant in the Granite Wash, a 200 MMcf/d processing plant in the Utica Shale, and a 60,000 Bbl/d fractionator with associated NGL logistics facilities at the Hopedale complex in Ohio

• Announced the development of 200 MMcf/d of additional processing capacity at the Mobley complex in the Marcellus Shale to support EQT Corporation and other producers

• Announced the development of 200 MMcf/d of additional processing capacity at the Sherwood complex in the Marcellus Shale to support Antero Resources Corporation

• Announced the completion of a 120 MMcf/d plant in the Woodford Shale as part of the Partnership’s Centrahoma Joint Venture

• The Partnership has 17 major processing and fractionation facilities under construction in the Northeast

• Achieved investment grade rating on Credit Facility

• Fee-based net operating margin increased to 66 percent from 58 percent when compared to the first quarter of 2013

DENVER—May 7, 2014—MarkWest Energy Partners, L.P. (NYSE: MWE) ("the Partnership") today reported quarterly cash available for distribution to common unitholders, or distributable cash flow (DCF), of $148.4 million for the three months ended March 31, 2014, compared to $109.8 million for the three months ended March 31, 2013. DCF for the three months ended March 31, 2014 represents distribution coverage of 105 percent. The first quarter distribution of $141.4 million, or $0.87 per common unit, will be paid to unitholders on May 15, 2014. The first quarter 2014 distribution represents an increase of $0.01 per common unit or 1.2 percent over the fourth quarter 2013 distribution and an increase of $0.04 per common unit or 4.8 percent compared to the first quarter 2013 distribution. As a Master Limited Partnership, cash distributions to common unitholders are largely determined based on DCF. A reconciliation of DCF to net income, the most directly comparable GAAP financial measure, is provided within the financial tables of this press release.

The Partnership reported Adjusted EBITDA of $187.6 million for the three months ended March 31, 2014, compared to $140.8 million for the same period in 2013. The Partnership believes the presentation of Adjusted EBITDA provides useful information because it is commonly used by investors in Master Limited Partnerships to assess financial performance and operating results of ongoing business operations. A reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, is provided within the financial tables of this press release.

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The Partnership reported income (loss) before provision for income tax for the three months ended March 31, 2014 of $28.5 million, compared to ($14.6) million for the same period in 2013. Income (loss) before provision for income tax includes non-cash gains associated with the change in fair value of derivative instruments of $11.8 million and $9.0 million for the three months ended March 31, 2014 and March 31, 2013, respectively, and a loss associated with the redemption of debt of $38.5 million for the three months ended March 31, 2013. Excluding these items, income before provision for income tax for the three months ended March 31, 2014 and 2013 would have been $16.7 million and $14.9 million, respectively.

"We are pleased to announce strong financial performance and record growth for the first quarter of 2014," stated Frank Semple, Chairman, President and Chief Executive Officer. "Due to the ongoing success of our producer customers, we continue to expand our full service midstream infrastructure throughout the rich-gas areas of the Northeast Shales and in our key growth areas of Oklahoma and Texas. Our customers’ rich-gas production continues to accelerate and we expect that in 2014 our overall system processed volumes will increase by 60 percent over last year. We also anticipate that the continued ramp up of volumes and cash flow will provide opportunities for additional increases in distribution growth in 2015 and 2016."

BUSINESS HIGHLIGHTS

Marcellus:

 

In January 2014, the Partnership commenced operations of a NGL pipeline connecting the Hopedale fractionation and marketing complex in Harrison County, Ohio to the Partnership’s NGL infrastructure in the Marcellus Shale. By integrating MarkWest’s two industry-leading midstream systems in the Northeast, the Partnership has expanded fractionation capacity for its Marcellus producers.

• Yesterday, the Partnership announced that it will increase total processing capacity at the Mobley complex in Wetzel County, West Virginia to 920 million cubic feet per day (MMcf/d) with the construction of an additional 200 MMcf/d processing plant. The new plant is anchored by a long-term, fee-based contract with EQT Corporation (NYSE: EQT) and is expected to be in service by the second quarter of 2015. The Mobley complex currently consists of three plants with 520 MMcf/d of total processing capacity and during the fourth quarter of this year, MarkWest will begin operations of a fourth plant at the complex, increasing capacity to 720 MMcf/d. The Mobley complex supports growing Marcellus rich-gas production from EQT, Magnum Hunter Resources Corporation (NYSE: MHR), Stone Energy Corporation (NYSE: SGY), CONSOL Energy Inc. (NYSE: CNX), and Noble Energy, Inc. (NYSE: NBL).

• Yesterday, the Partnership announced that it will construct an additional 200 MMcf/d processing plant at the Sherwood complex in Doddridge County, West Virginia, at the request of Antero Resources Corporation (NYSE: AR) (Antero). The new plant is anchored by a long-term, fee-based contract and will expand total capacity at the Sherwood complex to 1.2 billion cubic feet (Bcf/d) by the second quarter of 2015. Antero continues to develop its prolific rich-gas acreage position in northern West Virginia and is the anchor producer supporting the Sherwood complex.

Utica:

 

In January 2014, MarkWest Utica EMG and the Partnership commenced operations of the jointly-owned Hopedale fractionation and marketing complex (Hopedale complex) in Harrison

 

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County, Ohio. The Hopedale complex currently consists of a 60,000 barrels per day (Bbl/d) propane and heavier purity products (C3+) fractionator, over 230,000 barrels of purity product storage, truck loading facilities, and a 24-bay rail car loading facility with slots to accommodate 200 rail cars. The Hopedale complex is connected by NGL pipeline to MarkWest Utica EMG’s Cadiz processing complex in Harrison County, Ohio, to its Seneca processing complex in Noble County, Ohio, and to the Partnership’s extensive NGL gathering network in the Marcellus Shale.

• In February 2014, MarkWest Utica EMG commenced operations of Seneca II, a 200 MMcf/d processing plant at the Seneca complex in Noble County, Ohio. The Seneca complex currently consists of two cryogenic processing plants totaling 400 MMcf/d of capacity and is supported by long-term, fee-based agreements with Antero, Gulfport Energy Corporation (NASDAQ: GPOR), Rex Energy Corporation (NASDAQ: REXX), PDC Energy (NASDAQ: PDCE) and other producers. A third 200 MMcf/d plant at the complex was announced in May of 2013 and is expected to be completed during the second quarter of 2014.

• In February 2014, MarkWest Utica EMG announced the expansion of the Seneca complex with the development of a fourth 200 MMcf/d processing plant that is expected to be operational by the second quarter of 2015. The new plant is anchored by Antero under a long-term, fee-based contract and will expand total processing capacity of the complex to 800 MMcf/d.

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