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Ohio Utica Shale

MarkWest reports on 2012, plans for 2013 Utica shale progress

By Bob Downing Published: February 28, 2013

From MarkWest Energy:

DENVER--(BUSINESS WIRE)--Feb. 27, 2013-- MarkWest Energy Partners, L.P. (NYSE: MWE) (the Partnership) today reported record quarterly cash available for distribution to common unitholders, or distributable cash flow (DCF), of $111.8 million for the three months ended December 31, 2012, and $416.4 million for the year ended December 31, 2012. Distributable cash flow for the three months and year ended December 31, 2012, represents distribution coverage of 106 percent and 112 percent, respectively. The fourth quarter distribution of $105.4 million, or $0.82 per common unit, was paid to unitholders on February 14, 2013. The fourth quarter 2012 distribution represents an increase of $0.01 per common unit over the third quarter 2012 distribution and a full-year increase of 12.6 percent compared to 2011. 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 $135.1 million for the three months ended December 31, 2012 and $528.2 million for the year ended December 31, 2012, as compared to $147.2 million and $515.3 million for the three months and year ended December 31, 2011. 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.

The Partnership reported income before provision for income tax for the three months and year ended December 31, 2012, of $26.9 million and $257.1 million, respectively. Income before provision for income tax includes non-cash gain associated with the change in mark-to-market of derivative instruments of $0.3 million and $102.1 million for the three months and year ended December 31, 2012, respectively. Excluding these items, income before provision for income tax for the three months and year ended December 31, 2012, would have been $26.6 million and $155.0 million, respectively.

“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

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.

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Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

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Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.