Exhibit 99.1
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MarkWest Hydrocarbon, Inc. | | | | Contact: | Frank Semple, President and CEO |
1515 Arapahoe Street | | | | | Nancy Buese, Senior VP and CFO |
Tower 2, Suite 700 | | | | | Andy Schroeder, VP Finance & Treasurer |
Denver, CO 80202 | | | | Phone: | (866) 858-0482 Fax: (303) 925-9308 |
| | | | E-mail: | investorrelations@markwest.com |
| | | | Website: | www.markwest.com |
MarkWest Hydrocarbon Reports Third Quarter 2007 Financial Results
DENVER—November 6, 2007—MarkWest Hydrocarbon, Inc. (AMEX: MWP) (the “Company”) today reported a net loss of $7.5 million for the three months ended September 30, 2007, or $0.62 per share, compared to net income of $10.0 million, or $0.83 per diluted share, for the same period in 2006. For the nine months ended September 30, 2007, the Company reported a net loss of $13.8 million compared to net income of $10.7 million for the nine months ended September 30, 2006.
Income (loss) from operations for the Standalone segment, as defined below, for the three months ended September 30, 2007 and September 30, 2006, was $(25.5) million and $11.8 million, respectively, and included $24.2 million and $(9.0) million, respectively, of non-cash costs (benefits) associated with the mark-to-market of derivative instruments, the revaluation of the long-term shrink obligation, and non-cash compensation expense. A portion of the mark-to-market of derivative instruments is included in Purchased Product Costs. Excluding these non-cash items, income (loss) from operations for the three months ended September 30, 2007 and September 30, 2006, would have been $(1.3) million and $2.8 million, respectively. Historically, the second and third quarters of each year generate lower income from operations compared to the first and fourth quarters due to the normal seasonality of the Company’s business. While the Company purchases and processes consistent volumes of gas throughout the year, it generates higher revenues in the winter months when it sells higher volumes of NGLs than in the summer months.
The Company will receive $9.5 million of distributions from its investment in MarkWest Energy Partners (the “Partnership”) for the third quarter of 2007, which represents a 46 percent increase over the $6.5 million of distributions received for the third quarter of 2006. On October 26, 2007, the Company declared a quarterly cash dividend of $0.36 per share of common stock, for an implied annual rate of $1.44 per share, which is payable November 21, 2007, to shareholders of record as of November 9, 2007. This represents no change from the second quarter of 2007. Pursuant to a covenant contained in the redemption and merger agreement with the Partnership announced on September 5, 2007, the Company is prohibited from declaring any dividend greater than the per share dividend for the second quarter of 2007.
“It’s been another exciting and productive quarter for MarkWest Hydrocarbon” said Frank Semple, President and Chief Executive Officer. “Our third quarter financial results reflect continued net income contribution from our equity ownership of the Partnership. This strong income stream was offset by non-cash adjustments for compensation expense and the mark-to-market of our derivative instruments in the Standalone segment. The sales of natural gas liquids in the second and third quarters by the Company are typically lower than in the first and fourth quarter due to lower seasonal demand. The year-to-date operating income and full year forecast for the NGL marketing business
remains strong and we continue to take advantage of the forward markets to lock in favorable long-term frac spread margins.”
“The third quarter was particularly noteworthy because of the announcement of the merger agreement between MarkWest Hydrocarbon and the Partnership. The transaction, if consummated, will streamline our corporate structure, significantly improve our competitive position, and align the interests of MarkWest with one set of equity holders. Our people, assets, and focus on customer service have been the key to our success, and the positive attributes of the planned merger will further enhance the long-term value for our equity stakeholders.”
THIRD QUARTER 2007 HIGHLIGHTS
On September 5, 2007, the board of directors of the Company and the board of directors of the general partner of the Partnership announced that the Company and the Partnership entered into a definitive redemption and merger agreement. The transaction represents a 22 percent premium to the Company’s share price on the date the transaction was announced, and will allow the Company’s shareholders to elect as consideration for their shares either cash, units in the Partnership, or a combination of both. Additionally, the transaction will result in a substantial increase in the effective dividend rate for shareholders electing to receive units in the Partnership. A principal benefit of the transaction is the elimination of the existing incentive distribution rights (“IDRs”). Elimination of the IDRs reduces the Partnership’s cost of equity capital and strengthens its competitive position. In addition, the transaction will simplify the corporate structure of the Company and the Partnership, simplify corporate governance, and allow management to focus on driving value for one set of public equity owners. The transaction is expected to be accretive in 2008 to the Partnership unitholders as measured by distributable cash flow per common unit, and is anticipated to close in early 2008.
The Company reports its operations under two business segments, MarkWest Hydrocarbon Standalone (“Standalone”) and the Partnership. The Standalone business segment consists of the Company’s natural gas liquid (“NGL”) marketing activities for NGL’s extracted primarily at the Partnership’s Siloam facility and the management of keep-whole contracts in Appalachia.
For the three months ended September 30, 2007, the Standalone segment reported a loss from operations of $25.5 million, compared to income from operations of $11.8 million for the same period in 2006. The variance was primarily attributable to:
• The Standalone segment reported a net unrealized loss of $24.2 million for the mark-to-market of derivative instruments and the revaluation of the long-term shrink obligation, both of which are non-cash items. This compares to a net unrealized gain of $12.0 million for the same items in the third quarter of 2006, resulting in a negative quarter over quarter variance of $36.2 million.
• The realized frac spread, when adjusted for settled derivative losses, was $0.28 per gallon in the third quarter of 2007 compared to $0.49 per gallon in the same period in 2006, resulting in a negative impact on segment income of $5.1 million. Included within the derivate losses that settled in the third quarter of 2007 is $2.3 million, or $0.11 per gallon, attributable to natural gas swaps related to production in the fourth quarter of 2007 and the first quarter of 2008. The frac spread excluding settled derivative losses was $0.56 per gallon in the third quarter of 2007 compared to $0.50 per gallon in the same period in 2006.
• The above items were offset, in part, by a $4.2 million decrease in selling, general and administrative expense compared to the prior year quarter, of which $3.0 million is attributable to lower non-cash compensation expense.
The Company will host a conference call and webcast on Wednesday, November 7, 2007, at 5:00 P.M. ET to review its third quarter 2007 financial results. Interested parties can participate in the call by dialing (800) 369-2007, passcode “MarkWest”, approximately ten minutes prior to the scheduled start time. A replay of the call will be available through Wednesday, November 21, 2007, by dialing (866) 463-4179, no passcode required. To access the webcast, please visit the Investor Relations section of our website at www.markwest.com.
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MarkWest Hydrocarbon, Inc. (AMEX: MWP) controls and operates MarkWest Energy Partners, L.P. (NYSE: 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/A for the year ended December 31, 2006, 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.” We do not undertake any duty to update any forward-looking statement.
Although we believe that the expectations reflected in the forward-looking statements, specifically those including those referring to future performance, growth, cash flow, operating income, dividends, or other factors, are reasonable, these forward-looking statements are not guarantees of future performance and we can give no assurance that such expectations will prove to be correct and that projected performance or distributions may not be achieved. Among the factors that could cause results to differ materially are those risks discussed in our Form S-1, as amended, our Annual Report on Form 10-K/A for the year ended December 31, 2006, and our Quarterly Reports on Form 10-Q, as amended, each as filed with the SEC. You are also urged to carefully review and consider the cautionary statements and other disclosures, including those under the heading “Risk Factors,” made in those filings, which identify and discuss significant risks, uncertainties and various other factors that could cause actual results to vary significantly from those expressed or implied in the forward-looking statements. We do not undertake any duty to update any forward-looking statement.
MarkWest Energy Partners and MarkWest Hydrocarbon will file a joint proxy statement/prospectus and other documents with the Securities and Exchange Commission (the “SEC”) in relation to the merger transaction announced on September 5, 2007. Investors and security holders are urged to read these documents carefully when they become available because they will contain important information regarding MarkWest Energy Partners, MarkWest Hydrocarbon, and the transaction. A definitive joint proxy statement/prospectus will be sent to security holders of MarkWest Energy Partners and MarkWest Hydrocarbon seeking their approval of the transactions contemplated by the redemption and merger agreement. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus (when it is available) and other documents containing information about MarkWest Energy Partners and MarkWest Hydrocarbon, without charge, at the SEC’s website at www.sec.gov. Copies of the joint proxy statement/prospectus and the SEC filings that will be incorporated by reference in the joint proxy statement/prospectus may also be obtained free of charge by directing a request to the entities’ investor relations department at 866-858-0482, or by accessing their website at www.markwest.com.
MarkWest Energy Partners, MarkWest Hydrocarbon, the officers and directors of the general partner of MarkWest Energy Partners, and the officers and directors of MarkWest Hydrocarbon may be deemed to be participants in the solicitation of proxies from their security holders. Information about these persons can be found in the Annual Report on Form 10-K/A for the year ended December 31, 2006, for each of MarkWest Energy Partners and MarkWest Hydrocarbon, as filed with the SEC, and additional information about such persons may be obtained from the joint proxy statement/prospectus when it becomes available.
This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended.
MarkWest Hydrocarbon, Inc.
Statement of Operations
(Unaudited, in thousands, except per share amounts)
| | Three months ended September 30, | | Nine months ended September 30, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
| | | | (as restated) | | | | (as restated) | |
Revenue: | | | | | | | | | |
Revenue | | $ | 199,934 | | $ | 197,416 | | $ | 590,342 | | $ | 648,517 | |
Derivative (loss) gain | | (24,386 | ) | 22,721 | | (52,208 | ) | 8,405 | |
Total revenue | | 175,548 | | 220,137 | | 538,134 | | 656,922 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Purchased product costs | | 122,059 | | 121,936 | | 373,891 | | 443,718 | |
Facility expenses | | 18,624 | | 14,840 | | 49,101 | | 42,635 | |
Selling, general and administrative expenses | | 11,393 | | 19,069 | | 50,928 | | 43,506 | |
Depreciation | | 11,133 | | 8,126 | | 28,632 | | 23,282 | |
Amortization of intangible assets | | 4,168 | | 4,029 | | 12,504 | | 12,072 | |
Accretion of asset retirement obligations | | 30 | | 24 | | 85 | | 75 | |
Impairments | | 356 | | — | | 356 | | — | |
Total operating expenses | | 167,763 | | 168,024 | | 515,497 | | 565,288 | |
| | | | | | | | | |
Income from operations | | 7,785 | | 52,113 | | 22,637 | | 91,634 | |
| | | | | | | | | |
Other income (expense): | | | | | | | | | |
Earnings from unconsolidated affiliates | | 1,264 | | 1,067 | | 4,687 | | 3,240 | |
Interest income | | 403 | | 264 | | 3,923 | | 1,106 | |
Interest expense | | (10,202 | ) | (9,583 | ) | (28,670 | ) | (31,425 | ) |
Amortization of deferred financing costs and original issue discount (a component of interest expense) | | (771 | ) | (6,121 | ) | (2,222 | ) | (7,805 | ) |
Dividend income | | 170 | | 112 | | 509 | | 327 | |
| | | | | | | | | |
Miscellaneous income (expense) | | 1,149 | | 3,978 | | (257 | ) | 7,737 | |
(Loss) income before non-controlling interest in net income of consolidated subsidiary and income taxes | | (202 | ) | 41,830 | | 607 | | 64,814 | |
Non-controlling interest in net income of consolidated subsidiary | | (15,131 | ) | (26,438 | ) | (24,653 | ) | (48,255 | ) |
(Loss) income before taxes | | (15,333 | ) | 15,392 | | (24,046 | ) | 16,559 | |
Provision for income tax benefit (expense) | | 7,879 | | (5,388 | ) | 10,277 | | (5,855 | ) |
Net (loss) income | | $ | (7,454 | ) | $ | 10,004 | | $ | (13,769 | ) | $ | 10,704 | |
| | | | | | | | | |
Net (loss) income per share: | | | | | | | | | |
Basic | | $ | (0.62 | ) | $ | 0.84 | | $ | (1.15 | ) | $ | 0.90 | |
Diluted | | $ | (0.62 | ) | $ | 0.83 | | $ | (1.15 | ) | $ | 0.89 | |
| | | | | | | | | |
Weighted average number of outstanding shares of common stock: | | | | | | | | | |
Basic | | 12,001 | | 11,956 | | 11,995 | | 11,933 | |
Diluted | | 12,001 | | 12,015 | | 11,995 | | 12,021 | |
MarkWest Hydrocarbon, Inc.
Segment Income (Loss)
(Unaudited, in thousands)
| | MarkWest | | MarkWest | | | | | |
| | Hydrocarbon | | Energy | | Consolidating | | | |
| | Standalone | | Partners | | Entries | | Total | |
Three months ended September 30, 2007: | | | | | | | | | |
Revenue: | | | | | | | | | |
Revenue | | $ | 45,745 | | $ | 174,918 | | $ | (20,729 | ) | $ | 199,934 | |
Derivative loss | | (16,531 | ) | (7,855 | ) | — | | (24,386 | ) |
Total revenue | | 29,214 | | 167,063 | | (20,729 | ) | 175,548 | |
| | | | | | | | | |
Purchased product costs | | 47,443 | | 89,474 | | (14,858 | ) | 122,059 | |
Facility expenses | | 5,199 | | 19,346 | | (5,921 | ) | 18,624 | |
Selling, general and administrative expenses | | 1,828 | | 9,565 | | — | | 11,393 | |
Depreciation | | 240 | | 10,893 | | — | | 11,133 | |
Amortization of intangible assets | | — | | 4,168 | | — | | 4,168 | |
Accretion of asset retirement and lease obligations | | — | | 30 | | — | | 30 | |
Impairment | | — | | 356 | | | | 356 | |
(Loss) income from operations | | (25,496 | ) | 33,231 | | 50 | | 7,785 | |
| | | | | | | | | |
Other income (expense): | | | | | | | | | |
Earnings from unconsolidated affiliates | | — | | 1,264 | | — | | 1,264 | |
Interest income | | 253 | | 150 | | — | | 403 | |
Interest expense | | (130 | ) | (10,072 | ) | — | | (10,202 | ) |
Amortization of deferred financing costs (a component of interest expense) | | (69 | ) | (702 | ) | — | | (771 | ) |
Dividend income | | 169 | | 1 | | — | | 170 | |
Miscellaneous income | | 619 | | 593 | | (63 | ) | 1,149 | |
(Loss) income before non-controlling interest in net income of consolidated subsidiary and income taxes | | (24,654 | ) | 24,465 | | (13 | ) | (202 | ) |
Non-controlling interest in net income of consolidated subsidiary | | — | | — | | (15,131 | ) | (15,131 | ) |
Interest in net income of consolidated subsidiary | | 9,303 | | — | | (9,303 | ) | — | |
(Loss) income before taxes | | (15,351 | ) | 24,465 | | (24,447 | ) | (15,333 | ) |
Provision for income tax benefit (expense) | | 7,909 | | (304 | ) | 274 | | 7,879 | |
Net (loss) income | | $ | (7,442 | ) | $ | 24,161 | | $ | (24,173 | ) | $ | (7,454 | ) |
| | MarkWest | | MarkWest | | | | | |
| | Hydrocarbon | | Energy | | Consolidating | | | |
| | Standalone | | Partners | | Entries | | Total | |
| | | | (as restated) | | | | (as restated) | |
Three months ended September 30, 2006: | | | | | | | | | |
Revenue: | | | | | | | | | |
Revenue | | $ | 53,222 | | $ | 163,888 | | $ | (19,694 | ) | $ | 197,416 | |
Derivative gain | | 10,051 | | 12,670 | | — | | 22,721 | |
Total revenue | | 63,273 | | 176,558 | | (19,694 | ) | 220,137 | |
| | | | | | | | | |
Purchased product costs | | 40,149 | | 95,533 | | (13,746 | ) | 121,936 | |
Facility expenses | | 5,099 | | 15,689 | | (5,948 | ) | 14,840 | |
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 (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 | |
Non-controlling interest in net income of consolidated subsidiary | | — | | — | | (26,438 | ) | (26,438 | ) |
Interest in net income of consolidated subsidiary | | 3,540 | | — | | (3,540 | ) | — | |
(Loss) income before taxes | | 15,392 | | 29,978 | | (29,978 | ) | 15,392 | |
Provision for income tax expense | | (5,388 | ) | — | | — | | (5,388 | ) |
Net income | | $ | 10,004 | | $ | 29,978 | | $ | (29,978 | ) | $ | 10,004 | |
MarkWest Hydrocarbon, Inc.
Segment Income (Loss)
(Unaudited, in thousands)
| | MarkWest | | MarkWest | | | | | |
| | Hydrocarbon | | Energy | | Consolidating | | | |
| | Standalone | | Partners | | Entries | | Total | |
Nine months ended September 30, 2007: | | | | | | | | | |
Revenue: | | | | | | | | | |
Revenue | | $ | 170,830 | | $ | 478,608 | | $ | (59,096 | ) | $ | 590,342 | |
Derivative loss | | (30,061 | ) | (22,147 | ) | — | | (52,208 | ) |
Total revenue | | 140,769 | | 456,461 | | (59,096 | ) | 538,134 | |
| | | | | | | | | |
Purchased product costs | | 148,963 | | 265,810 | | (40,882 | ) | 373,891 | |
Facility expenses | | 14,974 | | 52,605 | | (18,478 | ) | 49,101 | |
Selling, general and administrative expenses | | 15,046 | | 35,882 | | — | | 50,928 | |
Depreciation | | 826 | | 27,806 | | — | | 28,632 | |
Amortization of intangible assets | | — | | 12,504 | | — | | 12,504 | |
Accretion of asset retirement and lease obligations | | — | | 85 | | — | | 85 | |
Impairment | | — | | 356 | | — | | 356 | |
(Loss) income from operations | | (39,040 | ) | 61,413 | | 264 | | 22,637 | |
| | | | | | | | | |
Other income (expense): | | | | | | | | | |
Earnings from unconsolidated affiliates | | — | | 4,687 | | — | | 4,687 | |
Interest income | | 1,374 | | 2,549 | | — | | 3,923 | |
Interest expense | | (252 | ) | (28,418 | ) | — | | (28,670 | ) |
Amortization of deferred financing costs (a component of interest expense) | | (198 | ) | (2,024 | ) | — | | (2,222 | ) |
Dividend income | | 427 | | 82 | | — | | 509 | |
Miscellaneous income (expense) | | 474 | | (668 | ) | (63 | ) | (257 | ) |
(Loss) income before non-controlling interest in net income of consolidated subsidiary and income taxes | | (37,215 | ) | 37,621 | | 201 | | 607 | |
Non-controlling interest in net income of consolidated subsidiary | | — | | — | | (24,653 | ) | (24,653 | ) |
Interest in net income of consolidated subsidiary | | 12,915 | | — | | (12,915 | ) | — | |
(Loss) income before taxes | | (24,300 | ) | 37,621 | | (37,367 | ) | (24,046 | ) |
Provision for income tax benefit (expense) | | 10,329 | | (429 | ) | 377 | | 10,277 | |
Net (loss) income | | $ | (13,971 | ) | $ | 37,192 | | $ | (36,990 | ) | $ | (13,769 | ) |
| | MarkWest | | MarkWest | | | | | |
| | Hydrocarbon | | Energy | | Consolidating | | | |
| | Standalone | | Partners | | Entries | | Total | |
| | | | (as restated) | | | | (as restated) | |
Nine months ended September 30, 2006: | | | | | | | | | |
Revenue: | | | | | | | | | |
Revenue | | $ | 217,504 | | $ | 486,301 | | $ | (55,288 | ) | $ | 648,517 | |
Derivative gain | | 2,396 | | 6,009 | | — | | 8,405 | |
Total revenue | | 219,900 | | 492,310 | | (55,288 | ) | 656,922 | |
| | | | | | | | | |
Purchased product costs | | 184,677 | | 296,368 | | (37,327 | ) | 443,718 | |
Facility expenses | | 15,678 | | 44,918 | | (17,961 | ) | 42,635 | |
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 (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 | |
Non-controlling interest in net income of consolidated subsidiary | | — | | — | | (48,255 | ) | (48,255 | ) |
Interest in net income of consolidated subsidiary | | 10,233 | | — | | (10,233 | ) | — | |
Income (loss) before taxes | | 16,423 | | 58,624 | | (58,488 | ) | 16,559 | |
Provision for income tax (expense) benefit | | (5,719 | ) | (679 | ) | 543 | | (5,855 | ) |
Net income | | $ | 10,704 | | $ | 57,945 | | $ | (57,945 | ) | $ | 10,704 | |
MarkWest Hydrocarbon, Inc.
Segment Balance Sheet
(Unaudited, in thousands)
| | MarkWest | | | | | | | |
| | Hydrocarbon | | MarkWest | | Consolidating | | | |
September 30, 2007 | | Standalone | | Energy Partners | | Entries | | Total | |
ASSETS | | | | | | | | | |
Current assets: | | | | | | | | | |
Cash and cash equivalents | | $ | 2,751 | | $ | 53,683 | | $ | — | | $ | 56,434 | |
Trading securities | | 3,701 | | — | | — | | 3,701 | |
Available for sale securities | | 6,778 | | — | | — | | 6,778 | |
Receivables | | 15,917 | | 112,453 | | (9,620 | ) | 118,750 | |
Inventories | | 37,959 | | 3,015 | | — | | 40,974 | |
Fair value of derivative instruments | | 6,160 | | 1,249 | | — | | 7,409 | |
Other current assets | | 19,006 | | 8,198 | | — | | 27,204 | |
Total current assets | | 92,272 | | 178,598 | | (9,620 | ) | 261,250 | |
| | | | | | | | | |
Property, plant and equipment, net | | 5,508 | | 758,913 | | — | | 764,421 | |
Investment in and advances to other equity investee | | — | | 59,582 | | — | | 59,582 | |
Investment in consolidated subsidiaries | | 88,077 | | — | | (88,077 | ) | — | |
Fair value of derivative instruments | | 2,812 | | — | | — | | 2,812 | |
Deferred tax asset | | — | | — | | — | | — | |
Other long term assets | | 2,620 | | 345,773 | | — | | 348,393 | |
Total assets | | $ | 191,289 | | $ | 1,342,866 | | $ | (97,697 | ) | $ | 1,436,458 | |
| | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable and accrued liabilities | | $ | 22,979 | | $ | 166,395 | | $ | (9,822 | ) | $ | 179,552 | |
Fair value of derivative instruments | | 33,678 | | 8,326 | | — | | 42,004 | |
Deferred tax liability | | 73 | | — | | — | | 73 | |
Total current liabilities | | 56,730 | | 174,721 | | (9,822 | ) | 221,629 | |
| | | | | | | | | |
Long-term debt | | — | | 589,612 | | — | | 589,612 | |
Deferred tax liability | | 5,651 | | 914 | | (776 | ) | 5,789 | |
Non-controlling interest in consolidated subsidiary | | 964 | | — | | 477,119 | | 478,083 | |
Fair value of derivative instruments | | 20,939 | | 11,183 | | — | | 32,122 | |
Other long-term liabilities | | 42,385 | | 2,016 | | — | | 44,401 | |
Total liabilities | | 126,669 | | 778,446 | | 466,521 | | 1,371,636 | |
| | | | | | | | | |
Total stockholders’ equity | | 64,620 | | 564,420 | | (564,218 | ) | 64,822 | |
Total liabilities and stockholders’ equity | | $ | 191,289 | | $ | 1,342,866 | | $ | (97,697 | ) | $ | 1,436,458 | |
MarkWest Hydrocarbon, Inc.
Segment Balance Sheet
(Unaudited, in thousands)
| | MarkWest | | | | | | | |
| | Hydrocarbon | | MarkWest | | Consolidating | | | |
December 31, 2006 | | Standalone | | Energy Partners | | Entries | | Total | |
ASSETS | | | | | | | | | |
Current assets: | | | | | | | | | |
Cash and cash equivalents | | $ | 14,442 | | $ | 34,402 | | $ | — | | $ | 48,844 | |
Marketable securities | | 7,713 | | — | | — | | 7,713 | |
Receivables | | 16,940 | | 90,780 | | (6,604 | ) | 101,116 | |
Inventories | | 31,668 | | 3,593 | | — | | 35,261 | |
Fair value of derivative instruments | | 5,727 | | 4,211 | | — | | 9,938 | |
Other current assets | | 12,217 | | 3,047 | | — | | 15,264 | |
Total current assets | | 88,707 | | 136,033 | | (6,604 | ) | 218,136 | |
| | | | | | | | | |
Property, plant and equipment, net | | 3,449 | | 550,886 | | — | | 554,335 | |
Investment in and advances to other equity investee | | — | | 64,240 | | — | | 64,240 | |
Investment in consolidated subsidiaries | | 12,683 | | — | | (12,683 | ) | — | |
Fair value of derivative instruments | | 35 | | 2,759 | | — | | 2,794 | |
Other long term assets | | 2,874 | | 360,862 | | — | | 363,736 | |
Total assets | | $ | 107,748 | | $ | 1,114,780 | | $ | (19,287 | ) | $ | 1,203,241 | |
| | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable and accrued liabilities | | $ | 19,370 | | $ | 131,684 | | $ | (6,604 | ) | $ | 144,450 | |
Fair value of derivative instruments | | 7,385 | | 91 | | — | | 7,476 | |
Deferred tax liability | | 180 | | — | | — | | 180 | |
Current portion of long term debt | | — | | — | | — | | — | |
Total current liabilities | | 26,935 | | 131,775 | | (6,604 | ) | 152,106 | |
| | | | | | | | | |
Long-term debt | | — | | 526,865 | | — | | 526,865 | |
Deferred tax liability and FIN 48 liability | | 9,425 | | 769 | | (641 | ) | 9,553 | |
Non-controlling interest in consolidated subsidiary | | 965 | | — | | 440,607 | | 441,572 | |
Fair value of derivative instruments | | 98 | | 1,362 | | — | | 1,460 | |
Other long-term liabilities | | 28,836 | | 1,360 | | — | | 30,196 | |
Total liabilities | | 66,259 | | 662,131 | | 433,362 | | 1,161,752 | |
| | | | | | | | | |
Total stockholders’ equity | | 41,489 | | 452,649 | | (452,649 | ) | 41,489 | |
Total liabilities and stockholders’ equity | | $ | 107,748 | | $ | 1,114,780 | | $ | (19,287 | ) | $ | 1,203,241 | |
MarkWest Hydrocarbon, Inc.
Operating Statistics
| | Three months ended September 30, | | Nine months ended September 30, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
MarkWest Hydrocarbon Standalone: | | | | | | | | | |
Marketing | | | | | | | | | |
Hydrocarbon frac spread sales (gallons) | | 20,620,000 | | 22,103,000 | | 89,301,000 | | 80,615,000 | |
Maytown sales (gallons) | | 11,172,000 | | 11,275,000 | | 33,219,000 | | 32,226,000 | |
Total NGL product sales (gallons)(1) | | 31,792,000 | | 33,378,000 | | 122,520,000 | | 112,841,000 | |
| | | | | | | | | |
Wholesale | | | | | | | | | |
NGL product sales (gallons)(2) | | N/A | | 7,867,000 | | N/A | | 35,063,000 | |
| | | | | | | | | |
MarkWest Energy Partners: | | | | | | | | | |
East Texas: | | | | | | | | | |
Gathering systems throughput (Mcf/d) | | 421,000 | | 393,000 | | 410,000 | | 371,000 | |
NGL product sales (gallons) | | 46,262,000 | | 42,015,000 | | 132,536,000 | | 117,912,000 | |
| | | | | | | | | |
Oklahoma: | | | | | | | | | |
Foss Lake gathering system throughput (Mcf/d) | | 108,000 | | 86,000 | | 102,000 | | 86,000 | |
Woodford gathering system throughput (Mcf/d) (3) | | 130,000 | | N/A | | 95,000 | | N/A | |
Grimes gathering system throughput (Mcf/d) (4) | | 11,000 | | N/A | | 12,000 | | N/A | |
Arapaho NGL product sales (gallons) | | 22,409,000 | | 19,553,000 | | 65,166,000 | | 57,586,000 | |
| | | | | | | | | |
Other Southwest: | | | | | | | | | |
Appleby gathering system throughput (Mcf/d) | | 58,000 | | 34,000 | | 55,000 | | 34,000 | |
Other gathering systems throughput (Mcf/d) | | 6,000 | | 18,000 | | 11,000 | | 20,000 | |
Lateral throughput volumes (Mcf/d) | | 101,000 | | 111,000 | | 73,000 | | 84,000 | |
| | | | | | | | | |
Appalachia: | | | | | | | | | |
Natural gas processed (Mcf/d) | | 194,000 | | 198,000 | | 197,000 | | 200,000 | |
NGLs fractionated (Gal/d) | | 423,000 | | 453,000 | | 444,000 | | 451,000 | |
NGL product sales (gallons) | | 11,172,000 | | 11,275,000 | | 33,219,000 | | 32,226,000 | |
| | | | | | | | | |
Michigan: | | | | | | | | | |
Natural gas throughput (Mcf/d) | | 4,900 | | 7,300 | | 5,700 | | 6,500 | |
NGL product sales (gallons) | | 963,000 | | 1,501,000 | | 3,153,000 | | 4,344,000 | |
Crude oil transported (Bbl/d) | | 13,800 | | 14,600 | | 14,100 | | 14,600 | |
| | | | | | | | | |
Gulf Coast: | | | | | | | | | |
Refinery off-gas processed (Mcf/d) | | 124,500 | | 125,000 | | 119,000 | | 125,000 | |
Liquids fractionated (Bbl/d) | | 30,700 | | 26,100 | | 26,600 | | 26,000 | |
(1) | Represents sales at the Siloam fractionator. |
(2) | Represents sales from our wholesale business. In December 2006 the Company terminated its wholesale agreement. |
(3) | The Partnership began construction and operation of the Woodford gathering system in late 2006. |
(4) | The Partnership acquired the Grimes gathering system in December 2006. |