QuickLinks -- Click here to rapidly navigate through this documentExhibit 99.1
MarkWest Energy Partners, L.P., Reports 2003 Fourth Quarter Results
DENVER—March 11, 2004—MarkWest Energy Partners, L.P. (AMEX: MWE) today reported a net loss for the three months ended December 31, 2003, of $0.2 million, or $(0.04) per diluted limited partner unit, compared to net income of $1.1 million, or $0.20 per diluted limited partner unit, for the fourth quarter of 2002. For the year ended December 31, 2003, the Partnership reported net income of $5.8 million, or $0.95 per diluted limited partner unit, compared to net income of $21.8 million or $4.83 per diluted limited partner unit, for the year ended December 31, 2002. Fiscal year 2002 net income included a $17.2 million non-cash increase in income to eliminate deferred income tax liabilities that existed at the date of conveyance of the MarkWest Hydrocarbon Midstream Business from MarkWest Hydrocarbon to the Partnership. For the year ended December 31, 2003, income before income taxes was $5.8 million, compared to $4.6 million for the year ended December 31, 2002.
Fourth quarter 2003 net income was adversely impacted by a $1.1 million impairment of our Cobb facility. We are currently constructing a new facility to replace our Cobb processing facility. The new facility is expected to be completed in the second half of 2004 at which time we will retire our current Cobb plant. In accordance with generally accepted accounting principles, we wrote-down our current Cobb facility to its fair value based on its accelerated date of disposition. Fourth quarter net income was also negatively affected by a $0.8 million non-cash charge stemming from the accelerated vesting of 23,758 phantom units on December 1, 2003. Since both charges were non-cash, they had no impact on Distributable Cash Flow (DCF). A reconciliation of DCF to our most directly comparable GAAP financial measure, net income (loss), is provided at the end of this press release.
As a Master Limited Partnership, cash distributions to limited partners are largely determined based on DCF. For the three months ended December 31, 2003, DCF was $4.3 million, compared to $2.3 million for the three months ended December 31, 2002. For the year ended December 31, 2003, DCF was $16.4 million, compared to $7.4 million for the period from May 24, 2002 (commencement of operations) to December 31, 2002.
Our December 1, 2003 acquisition of the Foss Lake gathering system and Arapaho gas processing assets in western Oklahoma and our December 18, 2003 acquisition of the Michigan crude oil pipeline were partial period contributors to fourth quarter earnings. Our Oklahoma assets generated approximately $0.4 million of income from operations during its first month of operations. Our Michigan crude oil pipeline generated approximately $0.2 million of income from operations during its first fourteen days of operations.
Each acquisition was initially financed by borrowings under our credit facility, which was expanded to $140 million on December 1, 2004. During January 2004, we raised $43.3 million, net of transaction costs, through a secondary offering of 1.17 million units at a price of $39.90 per unit. The proceeds from the offering were used to pay down long-term debt.
On January 21, 2004, the board of directors of the general partner of MarkWest Energy Partners, L.P., declared the Partnership's quarterly cash distribution of $0.67 per unit for the fourth quarter of 2003. This distribution represents an increase of $0.03 per unit over the previous quarter distribution. The indicated annual rate is $2.68 per unit. The fourth quarter distribution was paid February 13, 2004, to unitholders of record on January 31, 2004.
Frank Semple, President and CEO, said, "We are excited about the two acquisitions we closed in December. The western Oklahoma assets significantly broaden our presence in the southwest and contain very good growth potential. The Michigan crude oil pipeline is an excellent strategic fit and represents an ideal asset for our MLP."
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MarkWest Energy Partners L.P. is a publicly traded master limited partnership with a solid core of midstream assets and growing core of gas transmission assets. It is the largest processor of natural gas in the Northeast, processing gas from the Appalachian basin and from Michigan. Its Northeast assets include natural gas processing facilities, liquids fractionation, transportation and storage facilities. It also has a growing asset base of gas gathering and intrastate gas transmission assets in the Southwest [Texas and Oklahoma].
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 S-1, as amended, and our Forms 10-Q for the current year, as filed with the SEC.
MarkWest Energy Partners, L.P.
Financial Statistics
(in thousands of dollars except per unit amounts)
| | Three Months
Ended
December 31, 2003
| | Three Months
Ended
December 31, 2002
| | Year Ended
December 31, 2003
| | Year Ended
December 31, 2002
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|---|
| Statement of Operations Data | | | | | | | | | | | | | |
| | Revenues | | $ | 38,796 | | $ | 14,475 | | $ | 117,537 | | $ | 70,246 | |
| | Operating expenses: | | | | | | | | | | | | | |
| | | Purchased product costs | | | 25,507 | | | 5,872 | | | 70,832 | | | 38,906 | |
| | | Plant operating expenses and other expenses | | | 5,562 | | | 4,160 | | | 20,462 | | | 15,101 | |
| | | Selling, general and administrative expenses | | | 2,872 | | | 1,654 | | | 7,686 | | | 5,283 | |
| | | Depreciation | | | 2,317 | | | 1,277 | | | 7,548 | | | 4,980 | |
| | | Impairment | | | 1,148 | | | — | | | 1,148 | | | — | |
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| | | Total operating expenses | | | 37,406 | | | 12,963 | | | 107,676 | | | 64,270 | |
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| | | Income from operations | | | 1,390 | | | 1,512 | | | 9,861 | | | 5,976 | |
| | Other income (expenses): | | | | | | | | | | | | | |
| | | Interest expense, net | | | (1,465 | ) | | (425 | ) | | (4,057 | ) | | (1,414 | ) |
| | | Miscellaneous income (expense) | | | (77 | ) | | 34 | | | (26 | ) | | 52 | |
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| | Income (loss) before income taxes | | | (152 | ) | | 1,121 | | | 5,778 | | | 4,614 | |
| | | Benefit for income taxes | | | — | | | — | | | — | | | (17,175 | ) |
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| | | Net income (loss) | | $ | (152 | ) | $ | 1,121 | | $ | 5,778 | | $ | 21,789 | |
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| | General partner's interest in net income (loss) | | $ | 103 | | $ | 22 | | $ | 280 | | $ | 89 | |
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| | Limited partners' interest in net income (loss) | | $ | (255 | ) | $ | 1,099 | | $ | 5,498 | | $ | 21,700 | |
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| | Basic net income (loss) per limited partner unit | | $ | (0.04 | ) | $ | 0.20 | | $ | 0.96 | | $ | 4.86 | |
| | Diluted net income (loss) per limited partner unit | | $ | (0.04 | ) | $ | 0.20 | | $ | 0.95 | | $ | 4.83 | |
| | Weighted average units outstanding: | | | | | | | | | | | | | |
| | | Basic | | | 5,916 | | | 5,415 | | | 5,722 | | | 4,469 | |
| | | Diluted | | | 5,969 | | | 5,461 | | | 5,773 | | | 4,493 | |
| Cash Flow Data | | | | | | | | | | | | | |
| | Net cash flow provided by (used in): | | | | | | | | | | | | | |
| | | Operating activities | | $ | 4,400 | | $ | 4,361 | | $ | 20,840 | | $ | 33,502 | |
| | | Investing activities | | $ | (60,502 | ) | $ | (169 | ) | $ | (112,893 | ) | $ | (2,056 | ) |
| | | Financing activities | | $ | 58,482 | | $ | (2,834 | ) | $ | (98,030 | ) | $ | (28,670 | ) |
| Other Financial Data | | | | | | | | | | | | | |
| | Distributable cash flow | | $ | 4,296 | | $ | 2,340 | | $ | 16,361 | | $ | 7,378 | |
| | December 31, 2003
| | December 31, 2002
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| Balance Sheet Data | | | | | | | |
| | Working capital | | $ | 2,564 | | $ | 1,762 | |
| | Total assets | | $ | 212,978 | | $ | 87,709 | |
| | Total debt | | $ | 126,200 | | $ | 21,400 | |
| | Partners' capital | | $ | 65,549 | | $ | 61,574 | |
| | Total debt (net of cash) to total book capitalization | | | 64 | % | | 23 | % |
MarkWest Energy Partners, L.P.
Operating Statistics
| | Three Months
Ended
December 31, 2003
| | Three Months
Ended
December 31, 2002
| | Year Ended
December 31, 2003
| | Ended
Year
December 31, 2002
|
|---|
| Operating Data | | | | | | | | |
| | Appalachia: | | | | | | | | |
| | | Natural gas processed for a fee (Mcf/d)(1) | | 213,000 | | 201,000 | | 202,000 | | 202,000 |
| | | NGLs fractionated for a fee (gallons/day) | | 483,000 | | 483,000 | | 458,000 | | 476,000 |
| | | NGL product sales (gallons)(2) | | 11,335,000 | | 10,014,000 | | 40,305,000 | | 99,235,000 |
| | Southwest: | | | | | | | | |
| | | Gathering system throughput (Mcf/d)(3) | | 63,000 | | — | | 55,000 | | — |
| | Michigan: | | | | | | | | |
| | | Gas volumes processed for a fee (Mcf/d) | | 13,000 | | 15,200 | | 15,000 | | 13,800 |
| | | NGL product sales (gallons) | | 2,600,000 | | 3,000,000 | | 11,800,000 | | 11,100,000 |
- (1)
- Represents throughput from the Kenova, Cobb and Boldman processing plants.
- (2)
- The year ended December 31, 2002 results include the MarkWest Hydrocarbon midstream business for the period prior to May 24, 2002; as a result, the sales gallons are not directly comparable.
- (3)
- Includes volumes since March 28, 2003, the date the Pinnacle acquisition was completed. Also, includes PowerTex volumes; PowerTex was acquired September 2, 2003.
MarkWest Energy Partners, L.P.
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
(in thousands)
| | Three Months
Ended
December 31,
2003
| | Three Months
Ended
December 31,
2002
| | Year Ended
December 31,
2003
| | Period from
Commencement of
Operations
(May 24, 2002)
through
December 31,
2002
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|---|
| Net income (loss) | | $ | (152 | ) | $ | 1,121 | | $ | 5,778 | | $ | 4,457 | |
| | Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | |
| | | Depreciation | | | 2,317 | | | 1,277 | | | 7,548 | | | 3,064 | |
| | | Impairment | | | 1,148 | | | — | | | 1,148 | | | — | |
| | | Amortization of deferred financing costs included in interest expense | | | 282 | | | 159 | | | 984 | | | 291 | |
| | | Non-cash compensation expense | | | 803 | | | 73 | | | 1,357 | | | 73 | |
| | | Other | | | 82 | | | (50 | ) | | 102 | | | (114 | ) |
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| Cash flow from operations prior to changes in working capital | | | 4,480 | | | 2,580 | | | 16,917 | | | 7,771 | |
| Plus: | | | | | | | | | | | | | |
| | Third party costs incurred as part of credit facility amendments(a) | | | 167 | | | — | | | 485 | | | — | |
| Less: | | | | | | | | | | | | | |
| | Sustaining capital expenditures | | | (351 | ) | | (240 | ) | | (1,041 | ) | | (393 | ) |
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| Distributable cash flow(b) | | $ | 4,296 | | $ | 2,340 | | $ | 16,361 | | $ | 7,378 | |
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| Sustaining capital expenditures | | $ | 351 | | $ | 240 | | $ | 1,041 | | $ | 393 | |
| Expansion capital expenditures | | | 659 | | | — | | | 1,903 | | | 1,254 | |
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| | Total capital expenditures | | $ | 1,010 | | $ | 240 | | $ | 2,944 | | $ | 1,647 | |
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- (a)
- Transaction costs associated with capital raising activities are not considered reductions to Distributable Cash Flow under the terms of our partnership agreement.
- (b)
- Distributable Cash Flow provides additional information for evaluating our ability to make the minimum quarterly distribution and is presented solely as a supplemental measure. You should not consider Distributable Cash Flow as an alternative to net income, income before taxes, cash flow from operations, or any other measure of financial performance presented in accordance with accounting principles generally accepted in the United States. Our Distributable Cash Flow may not be comparable to similarly titled measures of other entities. Additional information regarding Distributable Cash Flow is included in our current report on Form 8-K filed on November 5, 2003.
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MarkWest Energy Partners, L.P., Reports 2003 Fourth Quarter ResultsMarkWest Energy Partners, L.P. Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (in thousands)
