EX-99.1 2 a05-22116_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 2005 Second Quarter Results

 

DENVER—December 19, 2005—MarkWest Hydrocarbon, Inc. (AMEX: MWP) (the “Company”) today reported a net loss for the three months ended June 30, 2005 of $1.6 million, or $0.15 per diluted share, compared to a net loss of $6.4 million, or $0.60 per diluted share, for the second quarter of 2004.  For the six months ended June 30, 2005, MarkWest Hydrocarbon reported a net loss of less than $0.1 million, or $0.01 per diluted share, compared to a net loss of $5.6 million, or $0.53 per diluted share, for the six months ended June 30, 2004.

 

The Company reported a $4.4 million increase in income from operations, reporting $1.5 million for the three months ended June 30, 2005, compared to a $3.0 million loss from operations for the second quarter of 2004.  For the six months ended June 30, 2005, the Company reported income from operations of $10.9 million, compared to $0.3 million for the six months ended June 30, 2004.

 

For the three months ended June 30, 2005, $4.2 million of the $4.4 million increase in income from operations is attributable to MarkWest Hydrocarbon Standalone operations.  Equity NGL product net operating margin contributed $1.9 million of this improvement and the non-recurrence of crude oil hedging losses contributed approximately $0.2 million to this improvement compared to same period in the prior year. Facility expenses declined by $0.7 million, selling, general and administrative expenses declined by $0.1 million, and the long-term shrink purchase obligation benefited from a $1.5 million mark-to-market decrease.  The long-term shrink purchase obligation is a non-cash adjustment.

 

Income from operations at MarkWest Energy Partners, L.P. increased by $0.2 million, primarily due to the East Texas acquisition it made in the third quarter of 2004.  The contribution to income from operations made by the East Texas assets was offset by the repairs and maintenance expenditures on the Appalachian liquids pipeline and by increases in selling, general and administrative expense.

 

A key element of the MarkWest Hydrocarbon Standalone activity is the 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 $3.1 million in distributions in the second quarter of 2005, which represents a significant increase over the $2.0 million received in the second quarter of 2004.

 

In August 2005, the Company paid a dividend for the quarter ended June 30, 2005 of $0.10 per share of its common stock held by the common stockholders.

 



 

“Our second quarter results reflect the continued focus on improving our NGL marketing business and growing MarkWest Energy Partners,” said Frank Semple, President and CEO.  “MarkWest Energy Partners continues to identify and execute on growth opportunities, which will continue to positively affect results for the balance of 2005 and well into the 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 continue to be developed. In addition, the recently announced acquisition of the Javelina facilities in Corpus Christi, Texas closed on November 1, 2005.  We anticipate that all of these facilities will contribute significant earnings in 2006 and beyond.”

 

The Company will host a conference call in January 2006, to review its second and third quarter 2005 earnings.  Details of the call will be provided with the third quarter 2005 earnings release.

 

###

 

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, 2004, as filed with the SEC.

 



 

MarkWest Hydrocarbon, Inc.

Statement of Operations

(in thousands of dollars except per share amounts)

 

 

 

Three Months

 

Three Months

 

Six Months

 

Six Months

 

 

 

Ended

 

Ended

 

Ended

 

Ended

 

 

 

June 30, 2005

 

June 30, 2004

 

June 30, 2005

 

June 30, 2004

 

Statement of Operations Data

 

 

 

 

 

 

 

 

 

Revenues

 

$

141,040

 

$

89,024

 

$

279,393

 

$

182,724

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Purchased product costs

 

112,354

 

77,262

 

217,053

 

152,750

 

Facility expenses

 

10,985

 

5,975

 

20,245

 

12,061

 

Selling, general and administrative expenses

 

9,125

 

5,070

 

17,227

 

10,385

 

Depreciation, amortization and accretion

 

7,101

 

3,691

 

13,947

 

7,253

 

Total operating expenses

 

139,565

 

91,998

 

268,472

 

182,449

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

1,475

 

(2,974

)

10,921

 

275

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Earnings from unconsolidated subsidiary

 

989

 

 

990

 

 

Interest income

 

321

 

221

 

570

 

10,385

 

Interest expense

 

(4,588

)

(923

)

(8,293

)

(3,061

)

Amortization of deferred financing costs

 

(558

)

(307

)

(1,094

)

10,385

 

Dividend income

 

96

 

83

 

188

 

83

 

Other income (expense)

 

148

 

(31

)

235

 

(5

)

 

 

 

 

 

 

 

 

 

 

Loss before non-controlling interest in net income of consolidated subsidiary and income taxes

 

(2,117

)

(3,931

)

3,517

 

(1,958

)

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

(802

)

491

 

(32

)

437

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest in net income of consolidated subsidiary

 

(294

)

(1,946

)

(3,619

)

(3,255

)

 

 

 

 

 

 

 

 

 

 

Net (loss)

 

$

(1,609

)

$

(6,368

)

$

(70

)

$

(5,650

)

 

 

 

 

 

 

 

 

 

 

Net (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.15

)

$

(0.60

)

(0.01

)

$

(0.53

)

Diluted

 

$

(0.15

)

$

(0.60

)

(0.01

)

$

(0.53

)

 

 

 

 

 

 

 

 

 

 

Weighted average number of outstanding shares of common stock:

 

 

 

 

 

 

 

 

 

Basic

 

10,782

 

10,681

 

10,774

 

10,628

 

Diluted

 

10,867

 

10,681

 

10,886

 

10,628

 

 



 

MarkWest Hydrocarbon, Inc.

Income (Loss) from Operations

(in thousands of dollars)

 

 

 

MarkWest Hydrocarbon Standalone

 

MarkWest
Energy
Partners

 

Eliminating
Entries

 

Total

 

Three Months Ended June 30, 2005:

 

 

 

 

 

 

 

 

 

Revenues

 

$

52,786

 

$

102,960

 

$

(14,706

)

$

141,040

 

Purchased product costs

 

47,729

 

73,862

 

(9,237

)

112,354

 

Net operating margin

 

5,057

 

29,098

 

(5,469

)

28,686

 

Facility expenses

 

5,094

 

11,360

 

(5,469

)

10,985

 

Selling, general and administrative expenses

 

2,814

 

6,311

 

 

9,125

 

Depreciation

 

419

 

4,576

 

 

4,995

 

Amortization of intangible assets

 

 

2,095

 

 

2,095

 

Accretion of asset retirement and sublease obligations

 

2

 

9

 

 

11

 

Income (loss) from operations

 

(3,272

)

4,747

 

 

1,475

 

 

 

 

 

 

 

 

 

 

 

Equity in earning of unconsolidated subsidiary

 

(1

)

990

 

 

 

989

 

Interest income

 

258

 

63

 

 

321

 

Interest expense

 

(30

)

(4,558

)

 

(4,588

)

Amortization of deferred financing costs (a component of interest expense)

 

(61

)

(497

)

 

(558

)

Dividend income

 

96

 

 

 

96

 

Other income (expense)

 

222

 

(74

)

 

148

 

Income (loss) before non-controlling interest in net income of consolidated subsidiary and income taxes

 

$

(2,788

)

$

671

 

$

 

$

(2,117

)

June 30, 2005:

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash

 

$

12,175

 

$

13,203

 

$

 

$

25,378

 

Marketable securities

 

20,344

 

 

 

20,344

 

Current assets

 

75,548

 

44,483

 

 

120,031

 

Current liabilities

 

26,968

 

43,269

 

 

70,237

 

Total assets

 

80,577

 

563,358

 

 

643,935

 

Total debt

 

 

290,000

 

 

290,000

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2004:

 

 

 

 

 

 

 

 

 

Revenues

 

$

37,286

 

$

65,659

 

$

(13,921

)

$

89,024

 

Purchased product costs

 

35,620

 

49,371

 

(7,729

)

77,262

 

Net operating margin

 

1,666

 

16,288

 

(6,192

)

11,762

 

Facility expenses

 

5,841

 

6,326

 

(6,192

)

5,975

 

Selling, general and administrative expenses

 

2,945

 

2,125

 

 

5,070

 

Depreciation

 

356

 

3,301

 

 

3,657

 

Amortization of intangible assets

 

 

34

 

 

34

 

Income (loss) from operations

 

(7,476

)

4,502

 

 

(2,974

)

 

 

 

 

 

 

 

 

 

 

Interest income

 

207

 

14

 

 

221

 

Interest expense

 

(8

)

(915

)

 

(923

)

Amortization of deferred financing cost (a component of interest expense)

 

8

 

(315

)

 

(307

)

Dividend income

 

83

 

 

 

83

 

Other expense

 

(6

)

(24

)

 

(30

)

Income (loss) before non-controlling interest in net income of consolidated subsidiary and income taxes

 

$

(7,193

)

$

3,262

 

$

 

$

(3,931

)

June 30, 2004:

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash

 

$

27,406

 

$

8,871

 

$

 

$

36,277

 

Marketable securities

 

13,875

 

 

 

13,875

 

Current assets

 

61,652

 

27,570

 

 

89,222

 

Current liabilities

 

24,122

 

112,361

 

 

136,483

 

Total assets

 

65,050

 

217,470

 

 

282,520

 

Total debt

 

 

86,200

 

 

86,200

 

 



 

 

 

MarkWest Hydrocarbon Standalone

 

MarkWest
Energy
Partners

 

Eliminating
Entries

 

Total

 

 

 

 

 

(in thousands)

 

 

 

Six Months Ended June 30, 2005:

 

 

 

 

 

 

 

 

 

Revenues

 

$

117,307

 

$

192,597

 

$

(30,511

)

$

279,393

 

Purchased product costs

 

101,550

 

134,647

 

(19,144

)

217,053

 

Net operating margin

 

15,757

 

57,950

 

(11,367

)

62,340

 

Facility expenses

 

10,921

 

20,691

 

(11,367

)

20,245

 

Selling, general and administrative expenses

 

6,277

 

10,950

 

 

17,227

 

Depreciation

 

834

 

8,902

 

 

9,736

 

Amortization of intangible assets

 

 

4,190

 

 

4,190

 

Accretion of asset retirement and sublease obligations

 

2

 

19

 

 

21

 

Income (loss) from operations

 

(2,277

)

13,198

 

 

10,921

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated subsidiaries

 

 

990

 

 

990

 

Interest income

 

440

 

130

 

 

570

 

Interest expense

 

(61

)

(8,232

)

 

(8,293

)

Amortization of deferred financing costs (a component of interest expense)

 

(122

)

(972

)

 

(1,094

)

Dividend income

 

188

 

 

 

188

 

Other income (expense)

 

413

 

(178

)

 

235

 

Income (loss) before non-controlling interest in net income of consolidated subsidiary and income taxes

 

$

(1,419

)

$

4,936

 

$

 

$

3,517

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2004:

 

 

 

 

 

 

 

 

 

Revenues

 

$

81,678

 

$

129,484

 

$

(28,438

)

$

182,724

 

Purchased product costs

 

71,471

 

97,224

 

(15,945

)

152,750

 

Net operating margin

 

10,207

 

32,260

 

(12,493

)

29,974

 

Facility expenses

 

11,938

 

12,616

 

(12,493

)

12,061

 

Selling, general and administrative expenses

 

5,362

 

5,023

 

 

10,385

 

Depreciation

 

739

 

6,446

 

 

7,185

 

Amortization of intangible assets

 

 

68

 

 

68

 

Income (loss) from operations

 

(7,832

)

8,107

 

 

275

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

335

 

21

 

 

356

 

Interest expense

 

(9

)

(2,044

)

 

(2,053

)

Amortization of deferred financing cost (a component of interest expense)

 

9

 

(623

)

 

(614

)

Dividend income

 

83

 

 

 

83

 

Other income (expense)

 

33

 

(38

)

 

(5

)

Income (loss) before non-controlling interest in net income of consolidated subsidiary and income taxes

 

$

(7,381

)

$

5,423

 

$

 

$

(1,958

)

 



 

MarkWest Hydrocarbon, Inc.

 

Operating Statistics

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2005

 

2004

 

2005

 

2004

 

Hydrocarbon Standalone

 

 

 

 

 

 

 

 

 

Marketing

 

 

 

 

 

 

 

 

 

NGL product sales (gallons)

 

31,317,000

 

35,703,000

 

83,481,000

 

87,228,000

 

 

 

 

 

 

 

 

 

 

 

Wholesale

 

 

 

 

 

 

 

 

 

NGL product sales (gallons)  (1)

 

7,087,000

 

4,058,000

 

26,759,000

 

4,947,000

 

 

 

 

 

 

 

 

 

 

 

MarkWest Energy Partners

 

 

 

 

 

 

 

 

 

Southwest:

 

 

 

 

 

 

 

 

 

East Texas (2)

 

 

 

 

 

 

 

 

 

Gathering system throughput (Mcf/d)

 

323,000

 

NA

 

305,000

 

NA

 

NGL product sales (gallons)

 

26,222,000

 

NA

 

50,596,000

 

NA

 

Oklahoma

 

 

 

 

 

 

 

 

 

Foss Lake gathering system throughput (Mcf/d)

 

70,000

 

63,000

 

69,000

 

59,000

 

Arapaho NGL product sales (gallons)

 

16,457,000

 

8,317,000

 

31,674,000

 

16,512,000

 

Other

 

 

 

 

 

 

 

 

 

Appleby gathering systems throughput (Mcf/d)

 

32,000

 

25,000

 

30,000

 

25,000

 

Other gathering systems throughput (Mcf/d)

 

16,000

 

15,000

 

17,000

 

17,000

 

Lateral throughput volumes (Mcf/d) (3)

 

91,000

 

119,000

 

72,000

 

74,000

 

 

 

 

 

 

 

 

 

 

 

Appalachia:

 

 

 

 

 

 

 

 

 

Natural gas processed for a fee (Mcf/d)(4)

 

192,000

 

197,000

 

200,000

 

202,000

 

NGLs fractionated for a fee (Gal/d)

 

421,000

 

480,000

 

441,000

 

469,000

 

NGL product sales (gallons)

 

10,154,000

 

11,001,000

 

20,919,000

 

21,927,000

 

 

 

 

 

 

 

 

 

 

 

Michigan:

 

 

 

 

 

 

 

 

 

Natural gas volumes transported (Mcf/d)

 

6,800

 

12,200

 

6,900

 

13,000

 

NGL product sales (gallons)

 

1,493,000

 

2,390,000

 

3,056,000

 

5,103,000

 

Crude oil transported (Bbl/d)

 

14,200

 

14,700

 

14,200

 

14,700

 

 


Footnotes:

NA – Not applicable.

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

(2)   We acquired our East Texas System in late July 2004.  Volumes are for the periods of time since we acquired the facility in 2004.

(3)   We acquired our Lubbock pipeline (a/k/a the PowerTex Lateral Pipeline) in September 2003 and our Hobbs lateral pipeline in April 2004.  The Lubbock and Hobbs pipelines are the only laterals we own that produce revenue on a per-unit-of-throughput basis.  We receive a flat fee from our other lateral pipelines and, consequently, the throughput data from these lateral pipelines is excluded from this statistic.

(4)   Includes throughput from our Kenova, Cobb, and Boldman processing plants.