Attached files
file | filename |
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8-K - 8-K - MARKWEST ENERGY PARTNERS L P | a11-24029_18k.htm |
Exhibit 99.1
MarkWest Energy Partners, L.P. |
Contact: |
Frank Semple, Chairman, President & CEO |
1515 Arapahoe Street |
|
Nancy Buese, Senior VP and CFO |
Tower 1, Suite 1600 |
|
Dan Campbell, VP of Finance & Treasurer |
Denver, Colorado 80202 |
Phone: |
(866) 858-0482 |
|
E-mail: |
investorrelations@markwest.com |
MarkWest Energy Partners Reports Record Quarterly Distributable
Cash Flow and Increases Common Unit Distribution by 9.4 Percent
DENVERAugust 8, 2011MarkWest 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 $82.9 million for the three months ended June 30, 2011, and $159.1 million for the six months ended June 30, 2011. Distributable cash flow for the three months and six months ended June 30, 2011, represents distribution coverage of 150 percent. The second quarter distribution of $55.4 million, or $0.70 per common unit, will be paid to unitholders on August 12, 2011. The second quarter 2011 distribution represents an increase of $0.03 per common unit, or 4.5 percent, over the first quarter 2011 distribution and an increase of $0.06 per common unit, or 9.4 percent, over the second quarter 2010 distribution. As a Master Limited Partnership, cash distributions to common unitholders are largely determined based on DCF. A reconciliation of DCF to net income (loss), the most directly comparable GAAP financial measure, is provided within the financial tables of this press release.
The Partnership reported Adjusted EBITDA of $120.0 million for the three months ended June 30, 2011, and $216.2 million for the six months ended June 30, 2011. MarkWest 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 (loss), 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 six months ended June 30, 2011, of $103.9 million and $15.1 million, respectively. Income before provision for income tax includes non-cash gain (loss) associated with the change in mark-to-market of derivative instruments of $55.7 million and $(24.2) million for the three and six months ended June 30, 2011, respectively, and costs associated with the redemption of debt of $(43.3) million for the six months ended June 30, 2011. Excluding these items, income before provision for income tax for the three and six months ended June 30, 2011, would have been $48.2 million and $82.6 million, respectively.
MarkWest had an outstanding second quarter with record distributable cash flow and a significant increase in distributions, said Frank Semple, Chairman, President and Chief Executive Officer. Since 2008 we have invested $2 billion in high-quality projects to significantly expand our presence in liquids-rich resource plays that provide superior economics for our producer customers and solid results for MarkWest. Our strong growth in DCF and distributions reflects the success of this strategy, and supports our objective to deliver superior and sustainable total returns for our unitholders.
BUSINESS HIGHLIGHTS
Capital Markets
· On June 15, 2011, the Partnership amended its $705 million senior secured revolving credit facility to increase the borrowing capacity to $745 million.
· On July 13, 2011, the Partnership completed a common unit equity offering of 4.025 million common units. The net proceeds of approximately $185.1 million were used to repay amounts outstanding under its revolving credit facility and to fund its ongoing capital expenditure program.
Business Development
· In the second quarter of 2011, MarkWest Liberty commenced operations of its 200 million cubic feet per day (MMcf/d) Houston III cryogenic processing plant and its 135 MMcf/d Majorsville II cryogenic processing plant, increasing MarkWest Libertys total processing capacity to 625 MMcf/d.
By late 2012, MarkWest Liberty is expected to operate 945 MMcf/d of cryogenic processing capacity in the liquids-rich areas of the Marcellus Shale, which includes current processing capacity of 625 MMcf/d and new processing capacity under construction of 320 MMcf/d. The new processing capacity includes the 120 MMcf/d Mobley, West Virginia processing complex that will primarily serve liquids-rich gas transported in EQTs Equitrans gas pipeline and a 200 MMcf/d processing complex near Sherwood, West Virginia that will serve the core of the Marcellus liquids-rich production in Doddridge and Wetzel counties. The Mobley and Sherwood processing complexes are supported by long-term agreements with high-quality producer customers. In addition, MarkWest Liberty is in discussions with its producer customers regarding additional processing expansions.
· On July 21, 2011, Sunoco Logistics Partners L.P. announced a binding open season for Mariner West, a pipeline project developed jointly by Sunoco Logistics and MarkWest Liberty to deliver Marcellus Shale ethane from MarkWest Libertys Houston, Pennsylvania processing and fractionation complex to Sarnia, Ontario, Canada markets. Mariner West is anticipated to have an initial capacity to transport up to 50,000 barrels per day of ethane, and is scheduled to be operational by mid-2013. The open season will end August 22, 2011.
FINANCIAL RESULTS
Balance Sheet
· At June 30, 2011, the Partnership had $71.6 million of cash and cash equivalents in wholly owned subsidiaries and $471.2 million available for borrowing under its $745 million revolving credit facility after consideration of $27.3 million of outstanding letters of credit.
Operating Results
· Operating income before items not allocated to segments for the three months ended June 30, 2011, was $147.8 million, an increase of $45.7 million when compared to segment operating income of $102.1 million in the same period in 2010. This increase is primarily attributable to higher commodity prices compared to the prior year quarter, expanding
operations in the Liberty and Northeast segments, and increased processing volumes in the Southwest segment.
A reconciliation of operating income before items not allocated to segments to income (loss) before provision for income tax, the most directly comparable GAAP financial measure, is provided within the financial tables of this press release.
· Operating income before items not allocated to segments does not include gain (loss) on commodity derivative instruments. Realized losses on commodity derivative instruments were $(17.7) million in the second quarter of 2011 compared to realized losses of $(11.4) million in the second quarter of 2010.
Capital Expenditures
· For the three and six months ended June 30, 2011, the Partnerships portion of capital expenditures was $101.6 million and $410.8 million, respectively. Capital expenditures for the six months ended June 30, 2011, include the $230.7 million acquisition of EQTs Langley processing complex and the Ranger natural gas liquids (NGL) pipeline.
2011 DCF AND GROWTH CAPITAL EXPENDITURE FORECAST
For 2011, the Partnership increased its DCF forecast from a range of $280 million to $320 million to a range of $300 million to $330 million based on forecasted operational volumes from existing operations, growth capital projects that will be completed and commence operations during 2011, derivative instruments currently outstanding, and a reasonable range of price estimates for crude oil and natural gas. The midpoint of this range results in approximately 145 percent coverage of the Partnerships full-year distribution based on current quarterly distributions and common units outstanding. A sensitivity analysis for forecasted 2011 DCF is provided within the tables of this press release.
The Partnerships portion of growth capital expenditures for 2011 is forecasted in a range of $675 million to $700 million, which includes the $230 million acquisition of EQTs Langley processing complex and the Ranger NGL pipeline. The Partnership forecasts maintenance capital for 2011 at approximately $15 million.
CONFERENCE CALL
The Partnership will host a conference call and webcast on Tuesday, August 9, 2011, at 4:00 p.m. Eastern Time to review its second quarter 2011 financial results. Interested parties can participate in the call by dialing (800) 475-0218 (passcode MarkWest) approximately ten minutes prior to the scheduled start time. To access the webcast, please visit the Investor Relations section of the Partnerships website at www.markwest.com. A replay of the conference call will be available on the MarkWest website or by dialing (866) 516-0668 (no passcode required).
###
MarkWest Energy Partners, L.P. is a master limited partnership engaged in the gathering, transportation, and processing of natural gas; the transportation, fractionation, marketing, and storage of natural gas liquids; and the gathering and transportation of crude oil. MarkWest has extensive natural gas gathering, processing, and transmission operations in the southwest, Gulf Coast, and northeast regions of the United States, including the Marcellus Shale, and is the largest natural gas processor and fractionator in the Appalachian region.
This press release includes forward-looking statements. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those
expressed or implied in such statements and are subject to a number of risks and uncertainties. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect our operations, financial performance, and other factors as discussed in our filings with the Securities and Exchange Commission. Among the factors that could cause results to differ materially are those risks discussed in the periodic reports we file with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2010, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading Risk Factors. We do not undertake any duty to update any forward-looking statement except as required by law.
MarkWest Energy Partners, L.P.
Financial Statistics
(unaudited, in thousands, except per unit data)
|
|
Three months ended June 30, |
|
Six months ended June 30, |
| ||||||||
Statement of Operations Data |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||
Revenue: |
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
$ |
359,849 |
|
$ |
276,948 |
|
$ |
708,749 |
|
$ |
592,563 |
|
Derivative gain (loss) |
|
40,590 |
|
46,902 |
|
(45,089 |
) |
39,666 |
| ||||
Total revenue |
|
400,439 |
|
323,850 |
|
663,660 |
|
632,229 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Purchased product costs |
|
154,580 |
|
128,123 |
|
308,209 |
|
272,419 |
| ||||
Derivative (gain) loss related to purchased product costs |
|
(254 |
) |
(8,392 |
) |
19,140 |
|
4,997 |
| ||||
Facility expenses |
|
40,698 |
|
37,427 |
|
80,122 |
|
75,332 |
| ||||
Derivative loss (gain) related to facility expenses |
|
2,927 |
|
934 |
|
(84 |
) |
128 |
| ||||
Selling, general and administrative expenses |
|
18,580 |
|
16,419 |
|
40,292 |
|
37,927 |
| ||||
Depreciation |
|
37,201 |
|
29,818 |
|
71,565 |
|
58,005 |
| ||||
Amortization of intangible assets |
|
10,830 |
|
10,193 |
|
21,647 |
|
20,386 |
| ||||
Loss on disposal of property, plant and equipment |
|
2,373 |
|
188 |
|
4,472 |
|
179 |
| ||||
Accretion of asset retirement obligations |
|
290 |
|
69 |
|
377 |
|
212 |
| ||||
Total operating expenses |
|
267,225 |
|
214,779 |
|
545,740 |
|
469,585 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income from operations |
|
133,214 |
|
109,071 |
|
117,920 |
|
162,644 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
(Loss) earnings from unconsolidated affiliates |
|
(216 |
) |
1,585 |
|
(755 |
) |
1,517 |
| ||||
Interest income |
|
63 |
|
377 |
|
152 |
|
763 |
| ||||
Interest expense |
|
(27,874 |
) |
(25,755 |
) |
(56,137 |
) |
(49,537 |
) | ||||
Amortization of deferred financing costs and discount (a component of interest expense) |
|
(1,443 |
) |
(2,280 |
) |
(2,871 |
) |
(4,892 |
) | ||||
Derivative gain related to interest expense |
|
|
|
|
|
|
|
1,871 |
| ||||
Loss on redemption of debt |
|
|
|
|
|
(43,328 |
) |
|
| ||||
Miscellaneous income (expense), net |
|
169 |
|
(9 |
) |
131 |
|
1,053 |
| ||||
Income before provision for income tax |
|
103,913 |
|
82,989 |
|
15,112 |
|
113,419 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for income tax expense (benefit): |
|
|
|
|
|
|
|
|
| ||||
Current |
|
4,089 |
|
923 |
|
4,145 |
|
6,721 |
| ||||
Deferred |
|
10,619 |
|
15,098 |
|
(3,567 |
) |
13,726 |
| ||||
Total provision for income tax |
|
14,708 |
|
16,021 |
|
578 |
|
20,447 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
|
89,205 |
|
66,968 |
|
14,534 |
|
92,972 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income attributable to non-controlling interest |
|
(10,708 |
) |
(6,751 |
) |
(20,066 |
) |
(11,245 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) attributable to the Partnership |
|
$ |
78,497 |
|
$ |
60,217 |
|
$ |
(5,532 |
) |
$ |
81,727 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) attributable to the Partnerships common unitholders per common unit: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
$ |
1.03 |
|
$ |
0.84 |
|
$ |
(0.09 |
) |
$ |
1.18 |
|
Diluted |
|
$ |
1.03 |
|
$ |
0.84 |
|
$ |
(0.09 |
) |
$ |
1.18 |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average number of outstanding common units: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
75,160 |
|
71,111 |
|
74,847 |
|
68,795 |
| ||||
Diluted |
|
75,266 |
|
71,298 |
|
74,847 |
|
68,889 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Cash Flow Data |
|
|
|
|
|
|
|
|
| ||||
Net cash flow provided by (used in): |
|
|
|
|
|
|
|
|
| ||||
Operating activities |
|
$ |
91,045 |
|
$ |
16,276 |
|
$ |
206,364 |
|
$ |
130,636 |
|
Investing activities |
|
$ |
(120,428 |
) |
$ |
(157,813 |
) |
$ |
(462,049 |
) |
$ |
(252,843 |
) |
Financing activities |
|
$ |
51,266 |
|
$ |
171,233 |
|
$ |
283,270 |
|
$ |
159,326 |
|
|
|
|
|
|
|
|
|
|
| ||||
Other Financial Data |
|
|
|
|
|
|
|
|
| ||||
Distributable cash flow |
|
$ |
82,944 |
|
$ |
52,905 |
|
$ |
159,080 |
|
$ |
117,248 |
|
Adjusted EBITDA |
|
$ |
120,004 |
|
$ |
72,683 |
|
$ |
216,191 |
|
$ |
161,145 |
|
|
|
|
|
|
|
|
|
|
| ||||
Balance Sheet Data |
|
June 30, 2011 |
|
December 31, 2010 |
|
|
|
|
| ||||
Working capital |
|
$ |
(25,186 |
) |
$ |
(43,296 |
) |
|
|
|
| ||
Total assets |
|
3,735,025 |
|
3,333,362 |
|
|
|
|
| ||||
Total debt |
|
1,582,102 |
|
1,273,434 |
|
|
|
|
| ||||
Total equity |
|
1,582,402 |
|
1,536,020 |
|
|
|
|
|
MarkWest Energy Partners, L.P.
Operating Statistics
|
|
Three months ended June 30, |
|
Six months ended June 30, |
| ||||
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
Southwest |
|
|
|
|
|
|
|
|
|
East Texas |
|
|
|
|
|
|
|
|
|
Gathering systems throughput (Mcf/d) |
|
428,300 |
|
438,700 |
|
427,000 |
|
433,900 |
|
NGL product sales (gallons) |
|
59,488,700 |
|
61,887,500 |
|
116,170,000 |
|
126,083,300 |
|
|
|
|
|
|
|
|
|
|
|
Oklahoma |
|
|
|
|
|
|
|
|
|
Foss Lake gathering system throughput (Mcf/d) |
|
72,000 |
|
70,600 |
|
69,900 |
|
72,400 |
|
Stiles Ranch gathering system throughput (Mcf/d) |
|
144,400 |
|
106,100 |
|
138,500 |
|
111,800 |
|
Grimes gathering system throughput (Mcf/d) |
|
7,500 |
|
8,000 |
|
7,300 |
|
8,000 |
|
Arapaho NGL product sales (gallons) |
|
35,088,100 |
|
30,093,800 |
|
74,108,200 |
|
59,537,100 |
|
Southeast Oklahoma gathering system throughput (Mcf/d) |
|
511,700 |
|
539,400 |
|
504,900 |
|
518,100 |
|
Southeast Oklahoma NGL product sales (gallons) |
|
32,142,900 |
|
23,483,000 |
|
61,505,500 |
|
42,367,800 |
|
Arkoma Connector Pipeline throughput (Mcf/d) |
|
298,400 |
|
387,500 |
|
292,100 |
|
372,700 |
|
|
|
|
|
|
|
|
|
|
|
Other Southwest |
|
|
|
|
|
|
|
|
|
Appleby gathering system throughput (Mcf/d) |
|
24,800 |
|
31,600 |
|
25,600 |
|
33,100 |
|
Other gathering systems throughput (Mcf/d) (1) |
|
6,800 |
|
8,700 |
|
6,700 |
|
8,800 |
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
|
|
|
|
|
|
|
|
Appalachia |
|
|
|
|
|
|
|
|
|
Natural gas processed (Mcf/d) (2) |
|
319,600 |
|
199,900 |
|
312,500 |
|
196,400 |
|
|
|
|
|
|
|
|
|
|
|
Keep-whole sales (gallons) |
|
21,078,000 |
|
30,815,000 |
|
60,913,900 |
|
76,587,400 |
|
Percent-of-proceeds sales (gallons) |
|
33,092,100 |
|
30,118,700 |
|
63,987,500 |
|
57,123,600 |
|
Total NGL product sales (gallons) (3) |
|
54,170,100 |
|
60,933,700 |
|
124,901,400 |
|
133,711,000 |
|
|
|
|
|
|
|
|
|
|
|
Michigan |
|
|
|
|
|
|
|
|
|
Crude oil transported for a fee (Bbl/d) |
|
11,500 |
|
12,100 |
|
10,800 |
|
12,500 |
|
|
|
|
|
|
|
|
|
|
|
Liberty |
|
|
|
|
|
|
|
|
|
Natural gas processed (Mcf/d) |
|
298,200 |
|
116,000 |
|
276,500 |
|
105,000 |
|
Gathering system throughput (Mcf/d) |
|
232,000 |
|
128,500 |
|
214,000 |
|
114,800 |
|
NGL product sales (gallons) |
|
50,668,000 |
|
23,462,500 |
|
102,429,600 |
|
44,992,700 |
|
|
|
|
|
|
|
|
|
|
|
Gulf Coast |
|
|
|
|
|
|
|
|
|
Javelina |
|
|
|
|
|
|
|
|
|
Refinery off-gas processed (Mcf/d) |
|
114,600 |
|
118,800 |
|
108,700 |
|
116,100 |
|
Liquids fractionated (Bbl/d) |
|
21,900 |
|
22,800 |
|
20,600 |
|
22,700 |
|
(1) Excludes lateral pipelines where revenue is not based on throughput.
(2) Includes throughput from the Kenova, Cobb, Boldman, and recently acquired Langley processing plants.
(3) Represents sales at the Siloam NGL fractionation plant. The total sales exclude 20,897,000 gallons and 12,648,600 gallons sold by the Northeast on behalf of Liberty for the three months ended June 30, 2011 and 2010, respectively, and 41,542,000 gallons and 23,305,800 gallons sold for the six months ended June 30, 2011 and 2010, respectively.
MarkWest Energy Partners, L.P.
Reconciliation of GAAP Financial Measure to Non-GAAP Financial Measure
Operating Income before Items not Allocated to Segments
(unaudited, in thousands)
Three months ended June 30, 2011 |
|
Southwest |
|
Northeast |
|
Liberty |
|
Gulf Coast |
|
Total |
| |||||
Revenue |
|
$ |
235,575 |
|
$ |
53,676 |
|
$ |
48,337 |
|
$ |
24,683 |
|
$ |
362,271 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |||||
Purchased product costs |
|
128,988 |
|
15,702 |
|
9,890 |
|
|
|
154,580 |
| |||||
Facility expenses |
|
20,855 |
|
6,929 |
|
7,269 |
|
8,312 |
|
43,365 |
| |||||
Total operating expenses before items not allocated to segments |
|
149,843 |
|
22,631 |
|
17,159 |
|
8,312 |
|
197,945 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Portion of operating income attributable to non-controlling interests |
|
1,346 |
|
|
|
15,182 |
|
|
|
16,528 |
| |||||
Operating income before items not allocated to segments |
|
$ |
84,386 |
|
$ |
31,045 |
|
$ |
15,996 |
|
$ |
16,371 |
|
$ |
147,798 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Three months ended June 30, 2010 |
|
Southwest |
|
Northeast |
|
Liberty |
|
Gulf Coast |
|
Total |
| |||||
Revenue |
|
$ |
155,043 |
|
$ |
81,322 |
|
$ |
18,738 |
|
$ |
21,845 |
|
$ |
276,948 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |||||
Purchased product costs |
|
71,389 |
|
56,734 |
|
|
|
|
|
128,123 |
| |||||
Facility expenses |
|
19,395 |
|
5,062 |
|
6,140 |
|
9,395 |
|
39,992 |
| |||||
Total operating expenses before items not allocated to segments |
|
90,784 |
|
61,796 |
|
6,140 |
|
9,395 |
|
168,115 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Portion of operating income attributable to non-controlling interests |
|
1,556 |
|
|
|
5,208 |
|
|
|
6,764 |
| |||||
Operating income before items not allocated to segments |
|
$ |
62,703 |
|
$ |
19,526 |
|
$ |
7,390 |
|
$ |
12,450 |
|
$ |
102,069 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
Three months ended June 30, |
|
|
|
|
|
|
| |||||||
|
|
2011 |
|
2010 |
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income before items not allocated to segments |
|
$ |
147,798 |
|
$ |
102,069 |
|
|
|
|
|
|
| |||
Portion of operating income attributable to non-controlling interests |
|
16,528 |
|
6,764 |
|
|
|
|
|
|
| |||||
Derivative gain not allocated to segments |
|
37,917 |
|
54,360 |
|
|
|
|
|
|
| |||||
Revenue deferral adjustment |
|
(2,422 |
) |
|
|
|
|
|
|
|
| |||||
Compensation expense included in facility expenses not allocated to segments |
|
(188 |
) |
(286 |
) |
|
|
|
|
|
| |||||
Facility expenses adjustments |
|
2,855 |
|
2,851 |
|
|
|
|
|
|
| |||||
Selling, general and administrative expenses |
|
(18,580 |
) |
(16,419 |
) |
|
|
|
|
|
| |||||
Depreciation |
|
(37,201 |
) |
(29,818 |
) |
|
|
|
|
|
| |||||
Amortization of intangible assets |
|
(10,830 |
) |
(10,193 |
) |
|
|
|
|
|
| |||||
Loss on disposal of property, plant and equipment |
|
(2,373 |
) |
(188 |
) |
|
|
|
|
|
| |||||
Accretion of asset retirement obligations |
|
(290 |
) |
(69 |
) |
|
|
|
|
|
| |||||
Income from operations |
|
133,214 |
|
109,071 |
|
|
|
|
|
|
| |||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
| |||||
(Loss) earnings from unconsolidated affiliate |
|
(216 |
) |
1,585 |
|
|
|
|
|
|
| |||||
Interest income |
|
63 |
|
377 |
|
|
|
|
|
|
| |||||
Interest expense |
|
(27,874 |
) |
(25,755 |
) |
|
|
|
|
|
| |||||
Amortization of deferred financing costs and discount (a component of interest expense) |
|
(1,443 |
) |
(2,280 |
) |
|
|
|
|
|
| |||||
Miscellaneous income (expense), net |
|
169 |
|
(9 |
) |
|
|
|
|
|
| |||||
Income before provision for income tax |
|
$ |
103,913 |
|
$ |
82,989 |
|
|
|
|
|
|
|
MarkWest Energy Partners, L.P.
Reconciliation of GAAP Financial Measure to Non-GAAP Financial Measure
Operating Income before Items not Allocated to Segments
(unaudited, in thousands)
Six months ended June 30, 2011 |
|
Southwest |
|
Northeast |
|
Liberty |
|
Gulf Coast |
|
Total |
| |||||
Revenue |
|
$ |
437,349 |
|
$ |
145,767 |
|
$ |
89,556 |
|
$ |
46,442 |
|
$ |
719,114 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |||||
Purchased product costs |
|
232,184 |
|
56,580 |
|
19,445 |
|
|
|
308,209 |
| |||||
Facility expenses |
|
41,012 |
|
12,523 |
|
13,767 |
|
17,302 |
|
84,604 |
| |||||
Total operating expenses before items not allocated to segments |
|
273,196 |
|
69,103 |
|
33,212 |
|
17,302 |
|
392,813 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Portion of operating income attributable to non-controlling interests |
|
2,518 |
|
|
|
27,559 |
|
|
|
30,077 |
| |||||
Operating income before items not allocated to segments |
|
$ |
161,635 |
|
$ |
76,664 |
|
$ |
28,785 |
|
$ |
29,140 |
|
$ |
296,224 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Six months ended June 30, 2010 |
|
Southwest |
|
Northeast |
|
Liberty |
|
Gulf Coast |
|
Total |
| |||||
Revenue |
|
$ |
320,007 |
|
$ |
193,170 |
|
$ |
37,748 |
|
$ |
41,638 |
|
$ |
592,563 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |||||
Purchased product costs |
|
146,014 |
|
123,821 |
|
2,584 |
|
|
|
272,419 |
| |||||
Facility expenses |
|
39,884 |
|
9,287 |
|
13,453 |
|
15,090 |
|
77,714 |
| |||||
Total operating expenses before items not allocated to segments |
|
185,898 |
|
133,108 |
|
16,037 |
|
15,090 |
|
350,133 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Portion of operating income attributable to non-controlling interests |
|
3,056 |
|
|
|
8,845 |
|
|
|
11,901 |
| |||||
Operating income before items not allocated to segments |
|
$ |
131,053 |
|
$ |
60,062 |
|
$ |
12,866 |
|
$ |
26,548 |
|
$ |
230,529 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
Six months ended June 30, |
|
|
|
|
|
|
| |||||||
|
|
2011 |
|
2010 |
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income before items not allocated to segments |
|
$ |
296,224 |
|
$ |
230,529 |
|
|
|
|
|
|
| |||
Portion of operating income attributable to non-controlling interests |
|
30,077 |
|
11,901 |
|
|
|
|
|
|
| |||||
Derivative (loss) gain not allocated to segments |
|
(64,145 |
) |
34,541 |
|
|
|
|
|
|
| |||||
Revenue deferral adjustment |
|
(10,365 |
) |
|
|
|
|
|
|
|
| |||||
Compensation expense included in facility expenses not allocated to segments |
|
(1,228 |
) |
(1,008 |
) |
|
|
|
|
|
| |||||
Facility expenses adjustments |
|
5,710 |
|
3,390 |
|
|
|
|
|
|
| |||||
Selling, general and administrative expenses |
|
(40,292 |
) |
(37,927 |
) |
|
|
|
|
|
| |||||
Depreciation |
|
(71,565 |
) |
(58,005 |
) |
|
|
|
|
|
| |||||
Amortization of intangible assets |
|
(21,647 |
) |
(20,386 |
) |
|
|
|
|
|
| |||||
Loss on disposal of property, plant and equipment |
|
(4,472 |
) |
(179 |
) |
|
|
|
|
|
| |||||
Accretion of asset retirement obligations |
|
(377 |
) |
(212 |
) |
|
|
|
|
|
| |||||
Income from operations |
|
117,920 |
|
162,644 |
|
|
|
|
|
|
| |||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
| |||||
(Loss) earnings from unconsolidated affiliate |
|
(755 |
) |
1,517 |
|
|
|
|
|
|
| |||||
Interest income |
|
152 |
|
763 |
|
|
|
|
|
|
| |||||
Interest expense |
|
(56,137 |
) |
(49,537 |
) |
|
|
|
|
|
| |||||
Amortization of deferred financing costs and discount (a component of interest expense) |
|
(2,871 |
) |
(4,892 |
) |
|
|
|
|
|
| |||||
Derivative gain related to interest expense |
|
|
|
1,871 |
|
|
|
|
|
|
| |||||
Loss on redemption of debt |
|
(43,328 |
) |
|
|
|
|
|
|
|
| |||||
Miscellaneous income, net |
|
131 |
|
1,053 |
|
|
|
|
|
|
| |||||
Income before provision for income tax |
|
$ |
15,112 |
|
$ |
113,419 |
|
|
|
|
|
|
|
MarkWest Energy Partners, L.P.
Reconciliation of GAAP Financial Measure to Non-GAAP Financial Measure
Distributable Cash Flow
(unaudited, in thousands)
|
|
Three months ended June 30, |
|
Six months ended June 30, |
| ||||||||
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
|
$ |
89,205 |
|
$ |
66,968 |
|
$ |
14,534 |
|
$ |
92,972 |
|
Depreciation, amortization, impairment, and other non-cash operating expenses |
|
50,772 |
|
40,346 |
|
98,217 |
|
78,938 |
| ||||
Loss on redemption of debt, net of tax benefit |
|
|
|
|
|
39,499 |
|
|
| ||||
Amortization of deferred financing costs |
|
1,443 |
|
2,280 |
|
2,871 |
|
4,892 |
| ||||
Non-cash loss (earnings) from unconsolidated affiliate |
|
216 |
|
(1,585 |
) |
755 |
|
(1,517 |
) | ||||
Distributions from unconsolidated affiliate |
|
300 |
|
1,155 |
|
300 |
|
1,155 |
| ||||
Non-cash compensation expense |
|
1,134 |
|
1,113 |
|
2,712 |
|
5,009 |
| ||||
Non-cash derivative activity |
|
(55,663 |
) |
(65,786 |
) |
24,121 |
|
(65,392 |
) | ||||
Provision for income tax - deferred |
|
10,619 |
|
15,098 |
|
(3,567 |
) |
13,726 |
| ||||
Cash adjustment for non-controlling interest of consolidated subsidiaries |
|
(15,536 |
) |
(6,442 |
) |
(28,058 |
) |
(11,043 |
) | ||||
Revenue deferral adjustment |
|
2,422 |
|
|
|
10,365 |
|
|
| ||||
Other |
|
1,496 |
|
2,234 |
|
3,203 |
|
1,820 |
| ||||
Maintenance capital expenditures, net of joint venture partner contributions |
|
(3,464 |
) |
(2,476 |
) |
(5,872 |
) |
(3,312 |
) | ||||
Distributable cash flow |
|
$ |
82,944 |
|
$ |
52,905 |
|
$ |
159,080 |
|
$ |
117,248 |
|
|
|
|
|
|
|
|
|
|
| ||||
Maintenance capital expenditures |
|
$ |
3,892 |
|
$ |
2,476 |
|
$ |
6,398 |
|
$ |
3,312 |
|
Growth capital expenditures |
|
116,572 |
|
155,462 |
|
227,718 |
|
249,948 |
| ||||
Total capital expenditures |
|
120,464 |
|
157,938 |
|
234,116 |
|
253,260 |
| ||||
Acquisition |
|
|
|
|
|
230,728 |
|
|
| ||||
Total capital expenditures and acquisition |
|
120,464 |
|
157,938 |
|
464,844 |
|
253,260 |
| ||||
Joint venture partner contributions |
|
(18,850 |
) |
(70,357 |
) |
(54,027 |
) |
(104,042 |
) | ||||
Total capital expenditures and acquisition, net |
|
$ |
101,614 |
|
$ |
87,581 |
|
$ |
410,817 |
|
$ |
149,218 |
|
|
|
|
|
|
|
|
|
|
| ||||
Distributable cash flow |
|
$ |
82,944 |
|
$ |
52,905 |
|
$ |
159,080 |
|
$ |
117,248 |
|
Maintenance capital expenditures, net |
|
3,464 |
|
2,476 |
|
5,872 |
|
3,312 |
| ||||
Changes in receivables and other assets |
|
(35,268 |
) |
(22,326 |
) |
(15,399 |
) |
(13,013 |
) | ||||
Changes in accounts payable, accrued liabilities and other long-term liabilities |
|
25,865 |
|
(22,372 |
) |
30,967 |
|
8,217 |
| ||||
Derivative instrument premium payments, net of amortization |
|
1,099 |
|
530 |
|
2,144 |
|
1,094 |
| ||||
Cash adjustment for non-controlling interest of consolidated subsidiaries |
|
15,536 |
|
6,442 |
|
28,058 |
|
11,043 |
| ||||
Other |
|
(2,595 |
) |
(1,379 |
) |
(4,358 |
) |
2,735 |
| ||||
Net cash provided by operating activities |
|
$ |
91,045 |
|
$ |
16,276 |
|
$ |
206,364 |
|
$ |
130,636 |
|
MarkWest Energy Partners, L.P.
Reconciliation of GAAP Financial Measure to Non-GAAP Financial Measure
Adjusted EBITDA
(unaudited, in thousands)
|
|
Three months ended June 30, |
|
Six months ended June 30, |
| ||||||||
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
|
$ |
89,205 |
|
$ |
66,968 |
|
$ |
14,534 |
|
$ |
92,972 |
|
Non-cash compensation expense |
|
1,134 |
|
1,113 |
|
2,712 |
|
5,009 |
| ||||
Non-cash derivative activity |
|
(55,663 |
) |
(65,786 |
) |
24,121 |
|
(64,590 |
) | ||||
Interest expense (1) |
|
27,092 |
|
25,769 |
|
54,548 |
|
49,975 |
| ||||
Depreciation, amortization, impairment, and other non-cash operating expenses |
|
50,772 |
|
40,346 |
|
98,217 |
|
78,938 |
| ||||
Loss on redemption of debt |
|
|
|
|
|
43,328 |
|
|
| ||||
Provision for income tax |
|
14,708 |
|
16,021 |
|
578 |
|
20,447 |
| ||||
Adjustment for cash flow from unconsolidated affiliate |
|
516 |
|
(429 |
) |
1,055 |
|
(361 |
) | ||||
Adjustment related to non-wholly owned, consolidated subsidiaries |
|
(7,416 |
) |
(10,897 |
) |
(22,106 |
) |
(20,765 |
) | ||||
Other |
|
(344 |
) |
(422 |
) |
(796 |
) |
(480 |
) | ||||
Adjusted EBITDA |
|
$ |
120,004 |
|
$ |
72,683 |
|
$ |
216,191 |
|
$ |
161,145 |
|
(1) Includes derivative activity related to interest expense, amortization of deferred financing costs and discount, and excludes interest expense related to the Steam Methane Reformer.
MarkWest Energy Partners, L.P.
Distributable Cash Flow Sensitivity Analysis
(unaudited, in millions)
MarkWest periodically estimates the effect on DCF resulting from its commodity risk management program, changes in crude oil and natural gas prices, and the correlation of NGL prices to crude oil. The table below reflects MarkWests estimate of the range of DCF for 2011 given actual results through June 30, 2011, and forecasted crude oil and natural gas prices for the remainder of 2011. The analysis assumes various combinations of crude oil prices and the ratio of crude oil to gas based on three NGL correlation scenarios, including:
a. The three-year NGL correlation to crude for the remainder of 2011.
b. One standard deviation above the three-year NGL correlation to crude for the remainder of 2011.
c. One standard deviation below the three-year NGL correlation to crude for the remainder of 2011.
The analysis further assumes derivative instruments outstanding as of July 28, 2011, and production volumes estimated through December 31, 2011. The range of stated hypothetical changes in commodity prices considers current and historic market performance.
Estimated Range of 2011 DCF
|
|
|
|
Natural Gas Price |
| ||||||||
Crude Oil Price |
|
Three-year NGL Correlation to Crude |
|
$3.50 |
|
$4.00 |
|
$4.50 |
| ||||
|
|
One standard deviation above |
|
$ |
368 |
|
$ |
367 |
|
$ |
366 |
| |
$ |
110 |
|
Three-year NGL correlation to crude |
|
$ |
349 |
|
$ |
348 |
|
$ |
347 |
|
|
|
One standard deviation below |
|
$ |
333 |
|
$ |
331 |
|
$ |
330 |
| |
|
|
One standard deviation above |
|
$ |
355 |
|
$ |
354 |
|
$ |
352 |
| |
$ |
100 |
|
Three-year NGL correlation to crude |
|
$ |
339 |
|
$ |
337 |
|
$ |
336 |
|
|
|
One standard deviation below |
|
$ |
323 |
|
$ |
322 |
|
$ |
320 |
| |
|
|
One standard deviation above |
|
$ |
342 |
|
$ |
340 |
|
$ |
339 |
| |
$ |
90 |
|
Three-year NGL correlation to crude |
|
$ |
328 |
|
$ |
327 |
|
$ |
325 |
|
|
|
One standard deviation below |
|
$ |
314 |
|
$ |
312 |
|
$ |
311 |
| |
|
|
One standard deviation above |
|
$ |
328 |
|
$ |
327 |
|
$ |
326 |
| |
$ |
80 |
|
Three-year NGL correlation to crude |
|
$ |
316 |
|
$ |
315 |
|
$ |
313 |
|
|
|
One standard deviation below |
|
$ |
303 |
|
$ |
302 |
|
$ |
301 |
|
The table is based on current information, expectations, and beliefs concerning future developments and their potential effects, and does not consider actions MarkWest management may take to mitigate exposure to changes. Nor does the table consider the effects that such hypothetical adverse changes may have on overall economic activity. Historical prices and correlations do not guarantee future results.
Although MarkWest believes the expectations reflected in this analysis are reasonable, MarkWest can give no assurance that such expectations will prove to be correct and readers are cautioned that projected performance, results, or distributions may not be achieved. Actual changes in market prices, and the correlation between crude oil and NGL prices, may differ from the assumptions utilized in the analysis. Actual results, performance, distributions, volumes, events, or transactions could vary significantly from those expressed, considered, or implied in this analysis. All results, performance, distributions, volumes, events, or transactions are subject to a number of uncertainties and risks. Those uncertainties and risks may not be factored into or accounted for in this analysis. Readers are urged to carefully review and consider the cautionary statements and disclosures made in MarkWests periodic reports filed with the SEC, specifically those under the heading Risk Factors.