DENVER, May 8 /PRNewswire-FirstCall/ -- MarkWest Hydrocarbon, Inc.
(AMEX:MWP) (the "Company") today reported net income of $2.8
million for the three months ended March 31, 2006, or $0.26 per
diluted share, compared to net income of $1.5 million, or $0.14 per
diluted share, for the first quarter of 2005. 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 $3.3 million in the first quarter of 2006, up from
$0.9 million in the first quarter of 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 $3.6 million in
distributions in the first quarter of 2006, which represents a 29%
increase over the $2.8 million received in the first 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
March 31, 2006, our Standalone segment reported a net loss of $0.5
million, a decrease of $1.1 million when compared to the $0.6
million of net income for the same period in 2005. This result is
summarized as follows: * Our realized fractionation (frac) spread
declined significantly compared to the prior year (approximately
$0.09 per gallon in 2006 vs. approximately $0.25 per gallon in
2005). When combined with a 2.2 million gallon reduction in sales,
this amounted to a $7.5 million negative impact on segment net
income. * The revaluation of our long-term shrink obligation (a
non-cash item) increased revenue by $4.2 million in the first
quarter of 2006 compared to a $1.2 million decrease in 2005,
resulting in a $5.4 million positive impact to the
quarter-over-quarter comparison. Our derivative activity, also a
non-cash item, resulted in a negative $1.5 impact on our Standalone
operations for the quarter, compared to none in 2005. * Other
areas, including SG&A, depreciation, interest and dividend
income and our other marketing operations offset these declines by
a combined $2.3 million. * Non-cash compensation included in
SG&A was $0.7 million for the first quarter in 2006 compared to
$1.3 million for 2005. In April 2006, the Company declared a stock
dividend of one share of MarkWest's common stock for each ten
shares of common stock held by MarkWest's common stockholders. The
stock dividend is to be paid on May 23, 2006, to the stockholders
of record as of the close of business on May 11, 2006. The
ex-dividend date is May 9, 2006. The Company also declared a
quarterly cash dividend of $0.175 per share of its common stock for
an implied annual rate of $0.70 per share to be paid on June 5,
2006, to shareholders of record as of May 26, 2006. This quarterly
cash dividend represents an increase of $0.05 per share over the
previous quarter's dividend. "Our continued objective is to drive
value for our MarkWest Hydrocarbon shareholders through the growth
of MarkWest Energy Partners. The partnership had a very strong
first quarter and we are very focused on continuing that
performance," said Frank Semple, President and Chief Executive
Officer. "Contributions to MarkWest Hydrocarbon's net income from
MarkWest Energy Partners was $3.3 million. Additionally, through
the ownership of the common units and GP interest, and since we are
well into the 50% incentive distributions rights splits,
Hydrocarbon's distributions from the Partnership will continue to
grow at a faster rate than the Partnership's per unit growth rate.
The recent Partnership acquisitions and core assets are performing
extremely well and there are significant opportunities for
additional growth. In addition to the strong distributable cash
flow performance, we were also pleased with MarkWest Energy
Partner's recent rating as the top midstream service provider by
the EnergyPoint Customer Satisfaction Research Survey. Our frac
spread business had a negative impact on MarkWest Hydrocarbon's
financial performance on a standalone basis when compared to the
strong first quarter we experienced in 2005, primarily due to the
very high cost of natural gas during the last quarter of 2005 and
early 2006. However, the spreads have improved during the last few
months and the frac spread indicators look strong through the
remainder of the year. We have hedged in excess of 20 million
gallons through the first quarter of 2007 and will continue to
evaluate opportunities to lock in favorable margins." The Company
will host a conference call on Tuesday, May 9, 2006, at 2:00 p.m.
(MDT) to review its first quarter 2006 earnings. Interested parties
can participate in the call by dialing the following number
approximately ten minutes prior to the scheduled start time:
1-866-249-6463. A replay of the call will be available through May
16, 2006 by dialing 1-800-405-2236 and entering the following
passcode: 11059923#. 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. 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. MarkWest
Hydrocarbon, Inc. Statement of Operations (in thousands, except per
share amounts) Three Months Ended March 31,
--------------------------- 2006 2005 ---------- ---------- (in
thousands) Revenues $240,880 $138,260 Derivatives (1,259) 93 Total
Revenue 239,621 138,353 Operating expenses: Purchased product costs
181,167 104,699 Facility expenses 13,704 9,260 Selling, general and
administrative expenses 11,376 8,102 Depreciation 7,378 4,741
Amortization of intangible assets 4,016 2,095 Accretion of asset
retirement obligation 25 10 Impairments -- -- Total operating
expenses 217,666 128,907 Income from operations 21,955 9,446 Other
income (expense): Income from unconsolidated subsidiary 945 --
Interest income 406 249 Interest expense (11,044) (3,704)
Amortization of deferred financing costs (a component of interest
expense) (825) (536) Dividend income 106 92 Miscellaneous income
(expense) 2,242 87 Income (loss) from continuing operations before
non-controlling interest in net income of consolidated subsidiary
and income taxes 13,785 5,634 Income tax (expense) benefit Current
493 -- Deferred (902) (770) Income tax (expense) benefit (409)
(770) Non-controlling interest in net income of consolidated
subsidiary (10,544) (3,325) Net income $2,832 $1,539 Net income per
share: Basic $0.26 $0.14 Diluted $0.26 $0.14 Weighted average
number of outstanding shares of common stock: Basic 10,821 10,766
Diluted 10,923 10,917 MarkWest Hydrocarbon, Inc. Segment Income
(Loss) (in thousands) MarkWest MarkWest Hydrocarbon Energy
Eliminating Standalone Partners Entries Total
------------------------------------------------ Quarter ended
March 31, 2006: Revenues $100,593 $156,743 $(17,715) $239,621
Purchased product costs 92,025 100,797 (11,655) 181,167 Net
operating margin 8,568 55,946 (6,060) 58,454 Facility expenses
5,770 13,994 (6,060) 13,704 Selling, general and administrative
expenses 3,038 8,338 -- 11,376 Depreciation 205 7,173 -- 7,378
Amortization of intangible assets -- 4,016 -- 4,016 Accretion of
asset retirement and lease obligations -- 25 -- 25 Operating income
(loss) (445) 22,400 -- 21,955 Other income (expense): Earnings from
unconsolidated subsidiary -- 945 -- 945 Interest income 186 220 --
406 Interest expense (68) (10,976) -- (11,044) Amortization of
deferred financing costs (a component of interest expense) (17)
(808) -- (825) Dividend income 106 -- -- 106 Other income 150 2,092
-- 2,242 Income before non-controlling interest in net income of
consolidated subsidiary and income taxes (88) 13,873 -- 13,785
Income tax expense (409) -- -- (409) Non-controlling interest in
net income of consolidated subsidiary -- -- (10,544) (10,544) Net
income (loss) $(497) $13,873 $(10,544) $2,832 MarkWest MarkWest
Hydrocarbon Energy Eliminating Standalone Partners Entries Total
------------------------------------------------ Quarter ended
March 31, 2005: Revenues $64,521 $89,637 $ (15,805) $138,353
Purchased product costs 53,821 60,785 (9,907) 104,699 Net operating
margin 10,700 28,852 (5,898) 33,654 Facility expenses 5,827 9,331
(5,898) 9,260 Selling, general and administrative expenses 3,463
4,639 -- 8,102 Depreciation 415 4,326 -- 4,741 Amortization of
intangible assets -- 2,095 -- 2,095 Accretion of asset retirement
and lease obligations -- 10 -- 10 Operating income (loss) 995 8,451
-- 9,446 Other income (expense): Interest income 182 67 -- 249
Interest expense (30) (3,674) -- (3,704) Amortization of deferred
financing costs (a component of interest expense) (61) (475) --
(536) Dividend income 92 -- -- 92 Other income 191 (104) -- 87
Income before non-controlling interest in net income of
consolidated subsidiary and income taxes 1,369 4,265 -- 5,634
Income tax expense (770) -- -- (770) Non-controlling interest in
net income of consolidated subsidiary -- -- (3,325) (3,325) Net
income (loss) $599 $4,265 $(3,325) $1,539 MarkWest Hydrocarbon,
Inc. Segment Balance Sheet (in thousands) March 31, 2006
--------------------------------------------------- MarkWest
MarkWest Hydrocarbon Energy Eliminating ASSETS Standalone Partners
Entries Consolidated ----------- --------- ----------- ------------
Current assets: Cash and cash equivalents $11,809 $26,823 $--
$38,632 Marketable securities 6,378 -- -- 6,378 Receivables 30,255
78,615 (6,707) 102,163 Inventories 10,539 5,517 -- 16,056 Other
19,241 7,056 -- 26,297 Total current assets 78,222 118,011 (6,707)
189,526 Property, plant and equipment, net 1,620 499,315 -- 500,935
Investment in and advances to other equity investee 7,191 199
(7,191) 199 Other assets 3,020 401,797 -- 404,817 Total assets
90,053 1,019,322 (13,898) 1,095,477 LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable and accrued
liabilities 30,626 114,432 (6,707) 138,351 Fair value of derivative
instruments 1,499 1,027 -- 2,526 Deferred income taxes 477 -- --
477 Current portion of long term debt -- 3,650 -- 3,650 Total
current liabilities 32,602 119,109 (6,707) 145,004 Long-term debt
-- 588,850 -- 588,850 Non-controlling interest in consolidated
subsidiary 508 -- 302,972 303,480 Other long-term liabilities
15,127 1,200 -- 16,327 Total liabilities 48,237 709,159 296,265
1,053,661 Total stockholders' equity 41,816 310,163 (310,163)
41,816 Total liabilities and stockholders' equity $90,053
$1,019,322 $(13,898) $1,095,477 MarkWest Hydrocarbon, Inc. Segment
Balance Sheet (continued) (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 26,946 3,554 -- 30,500 Other 20,020
6,861 -- 26,881 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 March 31,
---------------------------- 2006 2005 ----------- -------------
MarkWest Hydrocarbon Standalone: Marketing NGL product sales
(gallons) 49,967,000 52,164,000 Wholesale NGL product sales
(gallons)(1) 27,196,000 19,672,332 MarkWest Energy Partners:
Southwest: East Texas (2) Gathering systems throughput (Mcf/d)
346,000 287,000 NGL product sales (gallons) 35,436,000 27,612,000
Oklahoma Foss Lake gathering systems throughput (Mcf/d) 87,600
67,000 Arapaho NGL product sales (gallons) 18,417,000 15,217,000
Other Appleby gathering systems throughput (Mcf/d) 33,500 28,000
Other gathering systems throughput (Mcf/d) 19,100 17,000 Lateral
throughput volumes (Mcf/d)(3) 49,700 52,000 Appalachia: Natural gas
processed for a fee (Mcf/d)(4) 205,000 210,000 NGLs fractionated
for a fee (Gal/day) 449,000 462,000 NGL product sales (gallons)
10,482,000 10,765,000 Michigan: Natural gas processed for a fee
(Mcf/d) 6,300 6,900 NGL product sales (gallons) 1,449,000 1,563,000
Crude oil transported for a fee (Bbl/d) 14,000 14,100 Gulf
Coast:(5) Natural gas processed for a fee (Mcf/d) 120,000 NA NGLs
fractionated for a fee (Gal/day) 820,000 NA (1) Represents sales
from our wholesale business. Volumes are for the period since the
Company started the line of business in February 2004. (2) The
Partnership acquired its East Texas System in late July 2004.
Volumes are for the periods of time since the facility was acquired
in 2004. (3) The Partnership acquired its Lubbock pipeline (a/k/a
the PowerTex Lateral Pipeline) in September 2003 and its Hobbs
lateral pipeline in April 2004. The Lubbock and Hobbs pipelines are
the only laterals owned 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.
(5) The Partnership acquired its Javelina gathering system in
November 2005. Volumes are for the periods of time since the
facility was acquired in 2005. DATASOURCE: MarkWest Hydrocarbon,
Inc. CONTACT: Frank Semple, President and CEO, or James Ivey, CFO,
or Andy Schroeder, VP of Finance/Treasurer, all of MarkWest
Hydrocarbon, Inc., +1-303-290-8700, Web site:
http://www.markwest.com/
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