Mark West Energy Partners, L.P.

AMEX / MWE

 

 

MarkWest Energy Partners is engaged in gathering and processing natural gas and the transportation, fractionation, and storage of natural gas liquid (NGL) products.  It is the largest processor of natural gas in the Northeastern United States, processing gas from the Appalachian Basin, and the Southwest. 

 

The partnership was formed at the beginning of 2002 by MarkWest Hydrocarbons, Inc.  MarkWest Hydrocarbons and its affiliates own 43.8% of the partnership (including a 2% general partner interest), and MarkWest Hydrocarbons accounted for about 42% of the partnership’s revenues in 2003.   Reliance on MarkWest Hydrocarbons is diminishing and will continue to do so as the result of the partnership’s acquisitions.

 

MarkWest has the right to process the gas or fractionate the NGLs delivered by substantially all of the producers who deliver gas into two of the three largest gathering systems in Appalachia.  It owns and operates four natural gas processing plants in Appalachia with aggregate design throughput capacity of approximately 320,000 Mcf/d of natural gas, as well as a 32,000 Mcf/d processing plant, Kermit, which is operated by a third party.  The Appalachian plants, excluding the Kermit facility, processed an average of 254,000 Mcf/d of natural gas for the year ended December 31, 2003.  The Appalachian systems also include 136 miles of NGL pipeline, a NGL fractionation plant with a capacity of 600,000 Mcf/d which processed 458,000 Mcf/d during 2003, and an 11 million-gallon underground NGL storage facility.

 

In addition, MarkWest owns a 90-mile gas gathering pipeline and a natural gas processing plant in Michigan. The partnership gathered and processed an average of 15,000 Mcf/d of natural gas, and extracted approximately 32,000 gallons per day of NGLs at the processing plant, during 2003.  Mark West also acquired in December the Michigan Crude Pipeline, which includes approximately 244 miles of an intrastate crude gathering pipeline, four truck loading facilities and 15 storage tanks, and is the primary intrastate crude oil pipeline in Michigan. The pipeline has a capacity of 60,000 barrels per day.

 

Finally, following three acquisitions in the Southwest during 2003, MarkWest owns an aggregate of 302 miles of natural gas gathering pipelines in 21 gathering systems in Texas, Oklahoma, Kansas, Louisiana, Mississippi and New Mexico, as well as a gas processing plant and four Texas intrastate gas transmission pipelines that transmit natural gas to power plants, municipalities and other large industrial end users.  These include:

 

Ø        The Foss Lake gathering system, 167 miles of natural gas gathering pipeline, and the associated Arapaho gas processing plant in western Oklahoma.  The Foss Lake system has a capacity of 65,000 Mcf/d; average throughput during 2003 was 52,100 Mcf/d.  The Arapaho plant has a throughput capacity of 75,000 Mcf/d and averaged 51,500 Mcf/d of natural gas during 2003. Average NGL production was 82,500 gallons per day.

 

Ø        The Appleby gathering system, a low-pressure gathering system in Nacogdoches County, Texas consisting of approximately 80 miles of three to eight-inch pipeline connected to approximately 136 wells.  The pipeline has a throughput capacity of 40,000 Mcf/d and averaged 23,800 Mcf/d in 2003.

 

Ø        Nineteen other gas gathering systems, primarily located in Texas, with aggregate throughput capacity of 53,000 Mcf/d and averaging 20,500 Mcf/d in 2003.

 

Ø        The Southwest lateral pipelines, four natural gas lateral pipelines (the Lake Whitney, Rio Nogales, Blackhawk, and Lubbock laterals) which in aggregate total 135 miles.  These pipelines transport natural gas from main pipelines to power plants, industrial users, and municipalities.

 

MarkWest’s primary business strategy is to increase distributable cash flow per unit by:

Ø      Increasing utilization of its existing facilities by capturing additional natural gas and crude oil production from existing customers and providing services to other natural gas and crude oil producers in our areas of operation.

Ø      Expanding operations through new construction, expanding its asset base in its primary areas of operation to meet the anticipated need for additional midstream services.

Ø      Expanding operations through acquisitions: MarkWest will continue to pursue strategic acquisitions of assets and businesses in our existing areas of operation in order to leverage our current asset base, personnel and customer relationships.

Ø      Securing additional fee-based, long-term contracts, in both existing contracts and strategic acquisitions, as these are typically less affected by commodity prices than other arrangements.

 

For further information on MarkWest Energy Partners, call their Investor Relations office at 800-730-8388 or e-mail [email protected]; or visit their website at http://www.markwest.com.

 

Financial Information from 2003 10-K

(in thousands except per unit amounts)

 

 

2003

2002*

Market value**

$84,356

$51,269

Current assets

$23,688

$7,065

Net property, plant & equipment

$184,214

$79,824

Total assets

$212,978

$87,709

Current liabilities

$21,124

$5,303

Long-term debt

$126,200

$21,400

Partners’ capital

$65,051

$60,863

Revenues

$117,537

$33,203

Operating income (loss)

$9,860

$5,358

Net income (loss)

$5,778

$4,457

Net income (loss) per unit

$0.96

$0.81

Distributions per unit

$2.47

$1.23

High unit price

$40.90

$23.50

Low unit price

$22.95

$17.90

 

*IPO was May 24, 2002.   All 2002 income and unit information is for that date through December 31, 2002.

** As of June 30, 2003 and June 30, 2002

 

 

 

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