DENVER, Nov. 7 /PRNewswire-FirstCall/ -- MarkWest Hydrocarbon, Inc. (AMEX:MWP) (the "Company") today reported net income of $10.0 million for the three months ended September 30, 2006, or $0.83 per diluted share, compared to a net loss of $5.7 million, or $0.48 per diluted share, for the third quarter of 2005. The Company also reported net income of $10.7 million for the nine months ended September 30, 2006, or $0.89 per diluted share, compared to a net loss of $5.8 million, or $0.49 per diluted share, for the same period in 2005.
"We had another outstanding quarter as a result of MarkWest Energy Partners' distribution growth and strong operating cash flow performance from our NGL marketing business," said Frank Semple, President and Chief Executive Officer. "The partnership has increased distributions per unit 18.3% through the first three quarters of 2006 and is well positioned for future growth. Our NGL marketing business experienced record margins as a result of the strong frac spread environment and approximately 70% of our sales are now hedged through the second quarter of 2007." The Company declared a quarterly cash dividend of $0.28 per share of its common stock for an implied annual rate of $1.12 per share to be paid on November 21, 2006, to shareholders of record as of November 9, 2006. This quarterly cash dividend represents an increase of $0.04 per share over the previous quarter's dividend.
The Company reports its operations under two business segments, MarkWest Hydrocarbon Standalone ("Standalone") and MarkWest Energy Partners (the "Partnership").
MarkWest Hydrocarbon's share of net income attributable to MarkWest Energy Partners (net of the eliminating entry for non-controlling interest in net income of consolidated subsidiary) was $3.5 million in the third quarter of 2006, up from $0.6 million in the third quarter of 2005. For the nine months ended September 30, 2006 the Company's share was $10.2 million, up from $1.9 million for the same period in 2005. A key element of MarkWest Hydrocarbon's activity is the cash distributions it receives on its ownership interest in MarkWest Energy Partners, L.P., which consists of approximately 2.5 million limited partner units, its 2% general partner interest and its incentive distribution rights. MarkWest Hydrocarbon received $5.7 million in distributions in the third quarter of 2006, which represents an 84% increase over the $3.1 million received in the third quarter of 2005.
The Standalone business segment consists of the Company's natural gas liquid (NGL) marketing activities for our NGL's extracted primarily at MarkWest Energy Partners Siloam facility; the management of our keep-whole contracts in Appalachia and a wholesale propane marketing business. For the three months ended September 30, 2006, our Standalone segment reported net income of $10.0 million, an increase of $15.7 million when compared to the $5.7 million of net losses for the same period in 2005. This result is summarized as follows: * We reported an unrealized gain of $10.3 million for the mark-to-market
of our 2006/2007 derivative instruments related to our Standalone
operations, compared to none in 2005. The revaluation of our long-term
shrink obligation increased revenue by $1.7 million in the third
quarter of 2006 compared to a $7.5 million decrease in 2005, resulting
in a $9.2 million positive impact to the quarter-over-quarter
comparison. Both of these items are non-cash adjustments.
* Our realized frac spread improved significantly compared to the prior
year (approximately $0.50 per gallon in 2006 vs. approximately $0.20
per gallon in 2005). This was slightly offset by a 0.8 million gallon
decrease in frac spread sales. The net effect was a $6.3 million
positive impact on segment net income.
* Selling, general & administrative expense increased by $3.4 million. Non-cash compensation expense accounted for $2.4 million of this
increase.
* Income tax expense increased $8.3 million, which is primarily a
function of our 35% tax rate applied to the $23.9 million pre-tax
increase in net income.
The Company will host a conference call November 8, 2006, at 2:00 P.M. MST to review its third quarter 2006 earnings. Interested parties can participate in the call by dialing the following number approximately ten minutes prior to the scheduled start time: (800) 218-0713. A replay of the call will be available through November 15, 2006 by dialing (800) 405-2236 and entering the following passcode: 11074131#. To access the webcast, please visit our website at http://www.markwest.com/.
MarkWest Hydrocarbon, Inc. (AMEX:MWP) controls and operates MarkWest Energy Partners, L.P. (AMEX:MWE), a publicly traded limited partnership engaged in the gathering, processing and transmission of natural gas; the transportation, fractionation and storage of natural gas liquids; and the gathering and transportation of crude oil. We also market natural gas and NGLs.
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 our Form 10-K for the year ended December 31, 2005 as filed with the SEC. 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." MarkWest Hydrocarbon, Inc. Statement of Operations
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005 Revenues:
Revenues $183,516 $171,673 $610,985 $451,779
Derivative gains /
(losses) 22,721 (1,048) 8,406 (1,761)
Total revenue 206,237 170,625 619,391 450,018 Operating expenses:
Purchased product
costs 108,220 145,876 406,245 362,929
Facility expenses 14,656 12,082 42,577 32,327
Selling, general and
administrative expenses 19,069 7,913 43,506 25,140
Depreciation 8,126 5,025 23,282 14,761
Amortization of
intangible assets 4,029 2,098 12,072 6,288
Accretion of asset
retirement obligations 24 116 75 137
Total operating
expenses 154,124 173,110 527,757 441,582 Income (loss) from
operations 52,113 (2,485) 91,634 8,436 Other income (expense):
Earnings (losses) from
unconsolidated
affiliates 1,067 (999) 3,240 (9)
Interest income 264 271 1,106 841
Interest expense (9,583) (4,980) (31,425) (13,273)
Amortization of deferred
financing costs and
original issue discount
(a component of
interest expense) (6,121) (557) (7,805) (1,651)
Dividend income 112 101 327 289
Miscellaneous income 3,978 65 7,737 300
Income (loss) before
non-controlling
interest in net income
of consolidated
subsidiary and income
taxes 41,830 (8,584) 64,814 (5,067) Income tax benefit
(expense)
Current (3,283) -- (2,854) --
Deferred (2,105) 2,868 (3,001) 2,900
Income tax benefit
(expense) (5,388) 2,868 (5,855) 2,900 Non-controlling interest
in net income of
consolidated subsidiary (26,438) 28 (48,255) (3,591)
Net income (loss) $10,004 $(5,688) $10,704 $(5,758) Net income (loss) per
share:
Basic $0.84 $(0.48) $0.90 $ (0.49)
Diluted $0.83 $(0.48) $0.89 $ (0.49) Weighted average number of
outstanding shares of
common stock
(December 31, 2005
adjusted to reflect
May 23, 2006 Stock
Dividend, see Note 2):
Basic 11,956 11,872 11,933 11,859
Diluted 12,015 11,872 12,021 11,859 MarkWest Hydrocarbon, Inc. Segment Income (Loss)
(in thousands) MarkWest MarkWest
Hydrocarbon Energy Consolidating
Standalone Partners Entries Total Three months ended
September 30, 2006:
Revenues:
Revenue $53,223 $ 149,987 $(19,694) $ 183,516
Derivative gains 10,051 12,670 - 22,721
Total revenue 63,274 162,657 (19,694) 206,237 Purchased product costs 40,150 81,816 (13,746) 108,220
Facility expenses 5,099 15,505 (5,948) 14,656
Selling, general and
administrative expenses 5,991 13,078 -- 19,069
Depreciation 221 7,905 -- 8,126
Amortization of
intangible assets -- 4,029 -- 4,029
Accretion of asset
retirement and lease
obligations -- 24 -- 24
Income from operations 11,813 40,300 -- 52,113 Other income (expense):
Earnings from
unconsolidated
affiliates -- 1,067 -- 1,067
Interest income 34 230 -- 264
Interest expense (60) (9,523) -- (9,583)
Amortization of deferred
financing costs and
original issue discount
(a component of interest
expense) (55) (6,066) -- (6,121)
Dividend income 112 -- -- 112
Miscellaneous income 8 3,970 -- 3,978
Income before
non-controlling
interest in net income
of consolidated
subsidiary and income
taxes 11,852 29,978 -- 41,830
Income tax expense (5,388) -- -- (5,388)
Non-controlling interest
in net income of
consolidated subsidiary -- -- (26,438) (26,438)
Interest in net income
of consolidated
subsidiary 3,540 -- (3,540) --
Net income (loss) $10,004 $29,978 $(29,978) $10,004 MarkWest Hydrocarbon, Inc. Segment Income (Loss)
(in thousands) MarkWest MarkWest
Hydrocarbon Energy Consolidating
Standalone Partners Entries Total
Three months ended
September 30, 2005:
Revenues:
Revenue $56,859 $130,835 $(16,021) $ 171,673
Derivative (losses) (781) (267) -- (1,048)
Total revenue 56,078 130,568 (16,021) 170,625 Purchased product costs 57,789 98,874 (10,787) 145,876
Facility expenses 4,802 12,514 (5,234) 12,082
Selling, general and
administrative expenses 2,591 5,322 -- 7,913
Depreciation 254 4,771 -- 5,025
Amortization of
intangible assets -- 2,098 -- 2,098
Accretion of asset
retirement and lease
obligations (1) 117 -- 116
Income (loss) from
operations (9,357) 6,872 -- (2,485) Other income (expense):
Losses from
unconsolidated
affiliates -- (999) -- (999)
Interest income 191 80 -- 271
Interest expense (30) (4,950) -- (4,980)
Amortization of deferred
financing costs and
original issue discount
(a component of interest
expense) (61) (496) -- (557)
Dividend income 101 -- -- 101
Miscellaneous income 47 18 -- 65
Income (loss) before
non-controlling
interest in net
income of
consolidated
subsidiary and income
taxes (9,109) 525 -- (8,584)
Income tax benefit 2,868 -- -- 2,868
Non-controlling interest
in net income of
consolidated subsidiary -- 77 (49) 28
Interest in net income
of consolidated
subsidiary 553 -- (553) --
Net income (loss) $(5,688) $602 $(602) $(5,688) MarkWest Hydrocarbon, Inc. Segment Income (Loss)
(in thousands) MarkWest MarkWest
Hydrocarbon Energy Consolidating
Standalone Partners Entries Total
Nine months ended
September 30, 2006:
Revenues:
Revenue $217,503 $448,770 $(55,288) $610,985
Derivative gains 2,397 6,009 -- 8,406
Total revenue 219,900 454,779 (55,288) 619,391 Purchased product
costs 184,781 258,791 (37,327) 406,245
Facility expenses 15,574 44,964 (17,961) 42,577
Selling, general and
administrative
expenses 13,102 30,404 -- 43,506
Depreciation 820 22,462 -- 23,282
Amortization of
intangible assets -- 12,072 -- 12,072
Accretion of asset
retirement and lease
obligations -- 75 -- 75
Income from operations 5,623 86,011 -- 91,634 Other income (expense):
Earnings from
unconsolidated
affiliates -- 3,240 -- 3,240
Interest income 397 709 -- 1,106
Interest expense (212) (31,213) -- (31,425)
Amortization of deferred
financing costs and
original issue discount
(a component of
interest expense) (105) (7,700) -- (7,805)
Dividend income 327 -- -- 327
Miscellaneous income 160 7,577 -- 7,737
Income before
non-controlling
interest in net income
of consolidated
subsidiary and income
taxes 6,190 58,624 -- 64,814
Income tax benefit
(expense) (5,719) (679) 543 (5,855)
Non-controlling
interest in net income
of consolidated
subsidiary -- -- (48,255) (48,255)
Interest in net income
of consolidated
subsidiary 10,233 -- (10,233) --
Net income (loss) $10,704 $57,945 $(57,945) $10,704 MarkWest Hydrocarbon, Inc. Segment Income (Loss)
(in thousands) MarkWest MarkWest
Hydrocarbon Energy Consolidating
Standalone Partners Entries Total Nine months ended
September 30, 2005:
Revenues:
Revenue $174,733 $ 323,579 $(46,533) $ 451,779
Derivative (losses) (1,347) (414) -- (1,761)
Total revenue 173,386 323,165 (46,533) 450,018 Purchased product
costs 159,340 233,521 (29,932) 362,929
Facility expenses 15,723 33,205 (16,601) 32,327
Selling, general and
administrative
expenses 8,653 16,487 -- 25,140
Depreciation 1,088 13,673 -- 14,761
Amortization of
intangible assets -- 6,288 -- 6,288
Accretion of asset
retirement and lease
obligations 1 136 -- 137
Income (loss) from
operations (11,419) 19,855 -- 8,436 Other income (expense):
Losses from
unconsolidated
affiliates -- (9) -- (9)
Interest income 631 210 -- 841
Interest expense (91) (13,182) -- (13,273)
Amortization of deferred
financing costs and
original issue discount
(a component of
interest expense) (183) (1,468) -- (1,651)
Dividend income 289 -- -- 289
Miscellaneous income 244 56 -- 300
Income (loss) before
non-controlling
interest in net
income of
consolidated
subsidiary and
income taxes (10,529) 5,462 -- (5,067)
Income tax benefit 2,900 -- -- 2,900
Non-controlling
interest in net
income of
consolidated
subsidiary -- 76 (3,667) (3,591)
Interest in net income
of consolidated
subsidiary 1,871 -- (1,871) --
Net income (loss) $(5,758) $5,538 $(5,538) $(5,758) MarkWest Hydrocarbon, Inc. Segment Balance Sheet
(in thousands)
September 30, 2006 MarkWest MarkWest
Hydrocarbon Energy Consolidating
Standalone Partners Entries Consolidated
ASSETS
Current assets:
Cash and cash
equivalents $6,201 $30,599 $-- $36,800
Marketable securities 7,056 -- -- 7,056
Receivables 13,454 86,485 (5,862) 94,077
Inventories 42,306 3,993 -- 46,299
Fair value of
derivative
instruments 4,329 5,947 -- 10,276
Other current assets 9,077 4,344 -- 13,421
Total current
assets 82,423 131,368 (5,862) 207,929 Property, plant and
equipment, net 2,940 514,819 -- 517,759
Investment in and
advances to other
equity investee 13,170 59,596 (13,170) 59,596
Fair value of
derivative
instruments -- 3,236 -- 3,236
Other long term assets 3,087 352,955 -- 356,042
Total assets $101,620 $1,061,974 $(19,032) $1,144,562 LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $25,399 $122,928 $(5,862) $142,465
Fair value of
derivative
instruments 1,677 1,724 -- 3,401
Deferred income taxes 627 -- -- 627
Current portion of
long term debt -- -- -- --
Total current
liabilities 27,703 124,652 (5,862) 146,493 Long-term debt -- 479,654 -- 479,654
Deferred income taxes 6,352 679 (543) 6,488
Non-controlling
interest in
consolidated
subsidiary 710 -- 442,596 443,306
Fair value of
derivative
instruments -- 522 -- 522
Other long-term
liabilities 21,460 1,244 -- 22,704
Total liabilities 56,225 606,751 436,191 1,099,167 Total stockholders'
equity 45,395 455,223 (455,223) 45,395
Total liabilities
and stockholders'
equity $101,620 $1,061,974 $(19,032) $1,144,562 MarkWest Hydrocarbon, Inc. Segment Balance Sheet
(in thousands)
December 31, 2005 MarkWest MarkWest
Hydrocarbon Energy Eliminating
Standalone Partners Entries Consolidated
ASSETS
Current assets:
Cash and cash
equivalents $863 $20,105 $-- $20,968
Marketable securities 6,070 -- -- 6,070
Receivables 38,922 117,978 (11,361) 145,539
Inventories 37,513 3,554 -- 41,067
Other 9,453 6,861 -- 16,314
Total current assets 92,821 148,498 (11,361) 229,958 Property, plant and
equipment, net 1,737 492,961 -- 494,698
Investment in and
advances to other
equity investee 6,668 182 (6,668) 182
Other assets 3,014 404,452 -- 407,466
Total assets $104,240 $1,046,093 $(18,029) $1,132,304 LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $43,247 $133,088 $(11,361) $164,974
Fair value of
derivative
instruments -- 728 -- 728
Deferred income taxes 362 -- -- 362
Current portion of
long term debt -- 2,738 -- 2,738
Total current
liabilities 43,609 136,554 (11,361) 168,802 Long-term debt 7,500 601,262 -- 608,762
Non-controlling
interest in
consolidated
subsidiary 508 -- 300,507 301,015
Other long-term
liabilities 12,641 1,102 -- 13,743
Total liabilities 64,258 738,918 289,146 1,092,322 Total stockholders'
equity 39,982 307,175 (307,175) 39,982
Total liabilities and
stockholders' equity $104,240 $1,046,093 $(18,029) $1,132,304 MarkWest Hydrocarbon, Inc. Operating Statistics
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005
MarkWest Hydrocarbon
Standalone:
Marketing
Hydrocarbon frac
spread sales
(gallons) 22,103,000 22,871,000 80,615,000 85,433,000
Maytown sales
(gallons) 11,275,000 10,132,000 32,226,000 31,051,000
Total NGL product
sales (gallons) 33,378,000 33,003,000 112,841,000 116,484,000 Wholesale
NGL product sales
(gallons) 4,052,000 14,815,000 39,115,000 41,574,000 MarkWest Energy Partners:
Southwest:
East Texas
Gathering systems
throughput (Mcf/d) 393,000 330,000 371,000 313,000
NGL product sales
(gallons) 42,015,000 38,362,000 117,912,000 88,958,000 Oklahoma
Foss Lake gathering
systems throughput
(Mcf/d) 86,000 81,000 86,000 73,000
Arapaho NGL
product sales
(gallons) 19,553,000 14,506,000 57,586,000 46,180,000 Other
Appleby gathering
systems throughput
(Mcf/d) 34,000 38,000 34,000 33,000
Other gathering
systems throughput
(Mcf/d) 18,000 16,000 20,000 16,000
Lateral throughput
volumes (Mcf/d) 111,000 126,000 84,000 90,000 Appalachia:
Natural gas
processed for a
fee (Mcf/d) 198,000 188,000 200,000 197,000
NGLs fractionated
for a fee (Gal/day) 453,000 396,000 451,000 426,000
NGL product sales
(gallons) 11,275,000 10,132,000 32,226,000 31,051,000 Michigan:
Natural gas
processed for a
fee (Mcf/d) 7,300 6,500 6,500 6,700
NGL product sales
(gallons) 1,501,000 1,391,000 4,344,000 4,447,000
Crude oil
transported for a
fee (Bbl/d) 14,600 14,100 14,600 14,100 Gulf Coast:
Natural gas
processed for a
fee (Mcf/d) 125,000 NA 125,000 NA
NGLs fractionated
for a fee (Gal/day) 1,097,000 NA 1,090,000 NA
DATASOURCE: MarkWest Hydrocarbon, Inc.
CONTACT: Frank Semple, President and CEO, or Nancy K. Buese, CFO, or Andy Schroeder, VP Finance & Treasurer, all of MarkWest Hydrocarbon, Inc., +1-866-858-0482, or fax, +1-303-290-8769, Web site: http://www.markwest.com/
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