Exhibit 99.1
MarkWest Hydrocarbon, Inc. |
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| Contact: | Frank Semple, President and CEO |
155 Inverness Drive West, Suite 200 |
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|
| James Ivey, CFO |
Englewood, CO 80112-5000 |
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|
| Andy Schroeder, VP of Finance/Treasurer |
(800) 730-8388 |
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| Phone: | (303) 290-8700 |
(303) 290-8700 |
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| E-mail: | investorrelations@markwest.com |
(303) 290-8769 Fax |
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| 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.
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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)
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| Three Months |
| Three Months |
| Six Months |
| Six Months |
| ||||
|
| Ended |
| Ended |
| Ended |
| Ended |
| ||||
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| June 30, 2005 |
| June 30, 2004 |
| June 30, 2005 |
| June 30, 2004 |
| ||||
Statement of Operations Data |
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Revenues |
| $ | 141,040 |
| $ | 89,024 |
| $ | 279,393 |
| $ | 182,724 |
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| ||||
Operating expenses: |
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|
|
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|
|
|
|
| ||||
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 |
| ||||
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Income (loss) from operations |
| 1,475 |
| (2,974 | ) | 10,921 |
| 275 |
| ||||
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|
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| ||||
Other income (expense): |
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|
|
|
| ||||
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 | ) | ||||
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| ||||
Loss before non-controlling interest in net income of consolidated subsidiary and income taxes |
| (2,117 | ) | (3,931 | ) | 3,517 |
| (1,958 | ) | ||||
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| ||||
Provision (benefit) for income taxes |
| (802 | ) | 491 |
| (32 | ) | 437 |
| ||||
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| ||||
Non-controlling interest in net income of consolidated subsidiary |
| (294 | ) | (1,946 | ) | (3,619 | ) | (3,255 | ) | ||||
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Net (loss) |
| $ | (1,609 | ) | $ | (6,368 | ) | $ | (70 | ) | $ | (5,650 | ) |
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Net (loss) per share: |
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Basic |
| $ | (0.15 | ) | $ | (0.60 | ) | (0.01 | ) | $ | (0.53 | ) | |
Diluted |
| $ | (0.15 | ) | $ | (0.60 | ) | (0.01 | ) | $ | (0.53 | ) | |
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Weighted average number of outstanding shares of common stock: |
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|
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|
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| ||||
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 |
| Eliminating |
| Total |
| ||||
Three Months Ended June 30, 2005: |
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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 |
| ||||
|
|
|
|
|
|
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|
|
| ||||
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: |
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|
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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 |
| ||||
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|
|
| ||||
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: |
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|
|
|
|
|
|
|
| ||||
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 |
| Eliminating |
| Total |
| ||||
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|
|
| (in thousands) |
|
|
| ||||||
Six Months Ended June 30, 2005: |
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|
|
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|
|
|
|
| ||||
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 |
| ||||
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|
|
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|
|
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|
|
| ||||
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 |
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Six Months Ended June 30, 2004: |
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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 |
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Marketing |
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NGL product sales (gallons) |
| 31,317,000 |
| 35,703,000 |
| 83,481,000 |
| 87,228,000 |
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Wholesale |
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NGL product sales (gallons) (1) |
| 7,087,000 |
| 4,058,000 |
| 26,759,000 |
| 4,947,000 |
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MarkWest Energy Partners |
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Southwest: |
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East Texas (2) |
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Gathering system throughput (Mcf/d) |
| 323,000 |
| NA |
| 305,000 |
| NA |
|
NGL product sales (gallons) |
| 26,222,000 |
| NA |
| 50,596,000 |
| NA |
|
Oklahoma |
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|
|
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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 |
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|
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|
|
|
|
|
|
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 |
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Appalachia: |
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|
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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 |
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Michigan: |
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|
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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.