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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