EX-99.1 2 a05-18918_1ex99d1.htm EXHIBIT 99

Exhibit 99.1

 

 

 

 

 

 

MarkWest Hydrocarbon, Inc.

 

Contact:

 

Frank Semple, President and CEO

155 Inverness Drive West, Suite 200

 

 

 

James Ivey, CFO

Englewood, CO 80112-5000

 

 

 

Andy Schroeder, VP of Finance/Treasurer

(800) 730-8388

 

Phone:

 

(303) 290-8700

(303) 290-8700

 

E-mail:

 

investorrelations@markwest.com

(303) 290-8769 Fax

 

Website:

 

www.markwest.com

 

MarkWest Hydrocarbon Reports 2004 Fourth Quarter Results

 

DENVER—October 24, 2005—MarkWest Hydrocarbon, Inc. (AMEX: MWP) (the “Company”) on October 21 reported net income for the three months ended December 31, 2004 of $6.7 million, or $0.62 per diluted share, compared to a restated net loss of $12.6 million, or $1.21 per diluted share, for the fourth quarter of 2003.  For the year ended December 31, 2004, MarkWest Hydrocarbon reported a net loss of $0.9 million, or $0.08 per diluted share, compared to a restated net loss of $11.0 million, or $1.07 per diluted share, for the year ended December 31, 2003.

 

The Company reported income from continuing operations of $6.7 million, or $0.62 per diluted share, for the three months ended December 30, 2004, compared to a restated loss from continuing operations of $6.6 million, or $0.63 per diluted share, for the fourth quarter of 2003.  For the year ended December 31, 2004, the Company reported a net loss from continuing operations of $0.9 million, or $0.08 per diluted share, compared to a restated net loss from continuing operations of $22.4 million, or $2.17 per diluted share, for the corresponding year 2003.

 

The improved results for the fourth quarter of 2004, as compared to the corresponding quarter of 2003, was attributed to the impact of better NGL product margins, the non-recurrence of approximately $5.2 million of crude oil hedging losses and higher NGL product sales volumes.

 

The reduction in net loss from continuing operations for the calendar year 2004 as compared to the corresponding period of 2003 was also attributed to the factors impacting the fourth quarter comparisons.  Approximately $15.9 million of the change was attributable to a reduction in the Company’s crude oil hedging losses.  The remainder of the change was primarily due to better NGL product margins and due to acquisitions made by the Company’s subsidiary, MarkWest Energy Partners, L.P., late in 2003 and in the third quarter of 2004.

 

Finally, in September 2004, the Company entered into several new and amended agreements with one of the largest Appalachia producers, which allow the Company to significantly reduce its exposure to commodity price risk for approximately 25% of its keep-whole gas volumes.

 



 

In February 2005, the Company paid a dividend for the quarter ended December 30, 2004 of $0.075 per share of its common stock held by the common stockholders.  This represented a $0.025 per share increase over the previous quarter’s dividend.  The indicated annual rate is $0.30 per share.

 

“It has been a very challenging year for us from a financial reporting perspective,” said Frank Semple, President and CEO.  “However, we are pleased to report results for the fourth quarter and full year 2004. Our improved performance was primarily a result of increased NGL product sales and margins as well as the continued growth of MarkWest Energy Partners, L.P.  Completing the financial reports and improving our accounting capabilities and processes have been key priorities, however, we have also been very focused on the continued growth of MarkWest energy partners and optimization of our processing agreements in Appalachia. I am very pleased with the increased equity income from our ownership of MarkWest Energy common units and GP interest.  MarkWest Energy Partners continues to identify and execute on growth opportunities, which have impacted the 2004 results, and we believe will continue for the foreseeable future.  The East Texas Carthage processing plant is on schedule for start-up in January 2006 and a number of internal growth projects in the Southwest business unit are being developed.  Both the Appleby and Western Oklahoma assets continue to grow as high quality drilling opportunities behind these systems are exploited by our producer customers.  We are also excited about MarkWest Energy Partners recently announced acquisition of the Javelina facilities in Corpus Christi, Texas, which is anticipated to close November 1, 2005 and we anticipate will add significant earnings in 2006 and well into the future.  MarkWest Energy Partners will be a key part of our future growth and we are very pleased with their current performance and future opportunities.”

 

The Company will host a conference call on Tuesday, October 25, 2005, at 2:00 P.M. MDT to review their fourth quarter 2004 earnings.  Interested parties can participate in the call by dialing the following number approximately ten minutes prior to the scheduled start time:     1-800-257-2182.  A replay of the call will be available through November 1, 2005 by dialing     1-800-405-2236 and entering the following passcode: 11043136#.  To access the webcast, please visit our website at 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. 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, 2003, as filed with the SEC.

 



 

MarkWest Hydrocarbon, Inc.

Statement of Operations

(in thousands of dollars except per share amounts)

 

 

 

Three Months
Ended
December 31, 2004

 

Three Months
Ended
December 31,
2003

 

Year
Ended
December 31,
2004

 

Year
Ended
December 31,
2003

 

 

 

 

 

(as restated)

 

 

 

(as restated)

 

Statement of Operations Data

 

 

 

 

 

 

 

 

 

Revenues

 

$

155,878

 

$

61,077

 

$

460,113

 

$

209,268

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Purchased product costs

 

115,301

 

52,663

 

363,261

 

187,544

 

Facility expenses

 

8,121

 

6,207

 

28,580

 

20,957

 

Selling, general and administrative expenses

 

10,495

 

5,768

 

28,132

 

15,865

 

Depreciation, amortization, accretion and impairments

 

7,504

 

4,811

 

20,680

 

10,982

 

Total operating expenses

 

141,421

 

69,449

 

440,653

 

235,348

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

14,457

 

(8,372

)

19,460

 

(26,080

)

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(3,480

)

(1,335

)

(8,736

)

(4,241

)

Amortization of deferred financing costs

 

(1,547

)

(834

)

(5,281

)

(2,104

)

Dividend income

 

90

 

 

259

 

 

Miscellaneous income (expenses)

 

241

 

(52

)

788

 

(92

)

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes

 

9,761

 

(10,593

)

6,490

 

(32,517

)

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

(511

)

(3,830

)

78

 

(13,085

)

 

 

 

 

 

 

 

 

 

 

Non-controlling interest in net income of consolidated subsidiary

 

(3,556

)

200

 

(7,315

)

(2,988

)

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

6,716

 

(6,563

)

(903

)

(22,420

)

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued exploration and production operations, net of tax

 

 

(6,025

)

 

11,443

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before cumulative effect of accounting change

 

6,716

 

(12,588

)

(903

)

(10,977

)

 

 

 

 

 

 

 

 

 

 

Cumulative effect of accounting change, net of tax

 

 

 

 

(29

)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

6,716

 

$

(12,588

)

$

(903

)

$

(11,006

)

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.62

 

$

(0.63

)

$

(0.08

)

$

(2.17

)

Diluted

 

$

0.62

 

$

(0.63

)

$

(0.08

)

$

(2.17

)

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.62

 

$

(1.21

)

$

(0.08

)

$

(1.07

)

Diluted

 

$

0.62

 

$

(1.21

)

$

(0.08

)

$

(1.07

)

Weighted average number of outstanding shares of common stock:

 

 

 

 

 

 

 

 

 

Basic

 

10,750

 

10,399

 

10,686

 

10,328

 

Diluted

 

10,825

 

10,419

 

10,740

 

10,347

 

 



 

MarkWest Hydrocarbon, Inc.

Income (Loss) from Operations

(in thousands of dollars)

 

 

 

MarkWest
Hydrocarbon
Stand-alone

 

MarkWest Energy
Partners, L.P.

 

Eliminating
Entries

 

Total

 

Three Months Ended December 31, 2004

 

 

 

 

 

 

 

 

 

Revenues

 

$

77,619

 

$

93,988

 

$

(15,729

)

$

155,878

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Purchased product costs

 

61,915

 

62,594

 

(9,208

)

115,301

 

Facility expenses

 

5,844

 

8,798

 

(6,521

)

8,121

 

Selling, general and administrative expenses

 

3,708

 

6,787

 

 

10,495

 

Depreciation, amortization, accretion, and impairments

 

299

 

7,205

 

 

7,504

 

Total operating expenses

 

71,766

 

85,384

 

(15,729

)

141,421

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

$

5,853

 

$

8,604

 

$

 

$

14,457

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2003 (as restated)

 

 

 

 

 

 

 

 

 

Revenues

 

$

36,361

 

$

38,689

 

$

(13,973

)

$

61,077

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Purchased product costs

 

34,544

 

25,507

 

(7,388

)

52,663

 

Facility expenses

 

7,229

 

5,563

 

(6,585

)

6,207

 

Selling, general and administrative expenses

 

2,392

 

3,376

 

 

5,768

 

Depreciation and Impairments

 

1,346

 

3,465

 

 

4,811

 

Total operating expenses

 

45,511

 

37,911

 

(13,973

)

69,449

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

(9,150

)

$

778

 

$

 

$

(8,372

)

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2004

 

 

 

 

 

 

 

 

 

Revenues

 

$

218,337

 

$

301,314

 

$

(59,538

)

$

460,113

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Purchased product costs

 

185,951

 

211,534

 

(34,224

)

363,261

 

Facility expenses

 

23,983

 

29,911

 

(25,314

)

28,580

 

Selling general and administrative expenses

 

11,999

 

16,133

 

 

28,132

 

Depreciation, amortization, accretion and impairments

 

1,341

 

19,339

 

 

20,680

 

Total operating expenses

 

223,274

 

276,917

 

(59,538

)

440,653

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

(4,937

)

$

24,397

 

$

 

$

19,460

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2003 (as restated)

 

 

 

 

 

 

 

 

 

Revenues

 

$

142,569

 

$

117,430

 

$

(50,731

)

$

209,268

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Purchased product costs

 

142,633

 

70,832

 

(25,921

)

187,544

 

Facility expenses

 

25,304

 

20,463

 

(24,810

)

20,957

 

Selling general and administrative expenses

 

7,267

 

8,598

 

 

15,865

 

Depreciation, amortization, accretion and impairments

 

2,286

 

8,696

 

 

10,982

 

Total operating expenses

 

177,491

 

108,588

 

(50,731

)

235,348

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

(34,921

)

$

8,841

 

$

 

$

(26,080

)

 



 

MarkWest Hydrocarbon, Inc.

Financial Statistics

(in thousands)

 

 

 

Hydrocarbon
Stand-alone

 

MarkWest Energy

 

Eliminating
Entries

 

Total

 

 

 

(in thousands)

 

Year Ended December 31, 2004

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash

 

$

3,581

 

$

24,263

 

$

 

$

27,844

 

Marketable securities

 

14,815

 

 

 

14,815

 

Current assets

 

58,016

 

72,959

 

 

130,975

 

Current liabilities

 

14,656

 

62,412

 

 

77,068

 

Total assets

 

64,152

 

529,422

 

 

593,574

 

Total debt

 

 

225,000

 

 

225,000

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2003, (as restated)

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash

 

$

33,391

 

$

8,753

 

$

 

$

42,144

 

Current assets

 

63,498

 

23,581

 

 

87,079

 

Current liabilities

 

21,208

 

21,124

 

 

42,332

 

Total assets

 

67,624

 

212,871

 

 

280,495

 

Total debt

 

 

126,200

 

 

126,200

 

 



 

MarkWest Hydrocarbon, Inc.

Financial and Operating Statistics

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

 

2004

 

2003

 

% Change

 

2004

 

2003

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Data

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

NGL product sales (gallons)  (1)

 

47,900,000

 

51,300,000

 

(6.6

) %

178,000,000

 

177,000,000

 

0.6

%

Wholesale(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

NGL product sales (gallons)

 

26,338,000

 

NA

 

NA

 

42,154,000

 

NA

 

NA

 

MarkWest Energy Partners

 

 

 

 

 

 

 

 

 

 

 

 

 

Southwest:

 

 

 

 

 

 

 

 

 

 

 

 

 

Gathering system throughput (Mcf/d):

 

 

 

 

 

 

 

 

 

 

 

 

 

East Texas System(3)

 

267,700

 

NA

 

NA

 

259,300

 

NA

 

NA

 

Foss Lake (OK)(4)

 

61,500

 

57,000

 

8

%

60,900

 

57,000

 

7

%

Appleby(5)

 

29,600

 

22,300

 

33

%

27,100

 

23,800

 

(4

) %

Other gathering systems(5)

 

16,600

 

18,100

 

(8

) %

17,000

 

20,500

 

(16

) %

Lateral pipeline throughput volumes (6) (Mcf/d)

 

67,100

 

28,300

 

137

%

75,500

 

32,100

 

91

%

NGL product sales (gallons):

 

 

 

 

 

 

 

 

 

 

 

 

 

Arapaho (OK)(7)

 

16,587,000

 

2,910,000

 

NA

 

45,273,000

 

2,910,000

 

NM

 

East Texas System(4)

 

29,210,000

 

NA

 

NA

 

41,478,000

 

NA

 

NA

 

Appalachia:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas processed (8) (Mcf/d)

 

208,000

 

213,000

 

(2

) %

203,000

 

202,000

 

0.5

%

NGLs fractionated (gal/day)

 

478,000

 

483,000

 

(1

) %

475,000

 

458,000

 

4

%

NGLs product sales (gallons)

 

9,467,000

 

11,335,000

 

(16

) %

42,105,000

 

40,305,000

 

5

%

Michigan:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas processed for a fee (Mcf/d)

 

10,800

 

13,000

 

(17

) %

12,300

 

15,000

 

(18

)%

NGL product sales (gallons)

 

2,261,000

 

2,600,000

 

(13

) %

9,818,000

 

11,800,000

 

(17

)%

Crude oil transported (9) (barrels/day)

 

14,400

 

15,100

 

NA

 

14,700

 

15,100

 

NA

 

 


Footnotes:

NA – Not applicable

(1)

Represents sales at the Siloam fractionator.

(2)

Represents sales from our wholesale business. Volumes are for the period of time since the Company started the line of business in February 2004.

(3)

MarkWest Energy Partners acquired its East Texas System in late July 2004.

(4)

MarkWest Energy Partners acquired its Foss Lake (OK) gathering system in December 2003.

(5)

MarkWest Energy Partners acquired its Pinnacle gathering systems in late March 2003.

(6)

Includes volumes from MarkWest Energy Partners’ Power Tex Lateral pipeline (a/k/a the Lubbock Pipeline), which was acquired in September 2003, and our Hobbs Lateral pipeline, which was acquired in April 2004. The Power-Tex and Hobbs Lateral pipelines are the only laterals the Partnership owns that produce revenue on a per-unit-of-throughput basis. MarkWest Energy Partners receives a flat fee from the other lateral pipelines it owned during the first quarter of 2004 and, therefore, the throughput data from these lateral pipelines is excluded from this statistic.

(7)

MarkWest Energy Partners acquired its Arapaho (OK) processing plant in December 2003.

(8)

Includes throughput from the Partnership’s Kenova, Cobb and Boldman processing plants.

(9)

MarkWest Energy Partners acquired its Michigan Crude Pipeline in December 2003.