MarkWest Grows in Marcellus, Utica in First-Quarter 2014, Pegs Full-Year Capex at $2 Billion-Plus

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Researched by Industrial Info Resources (Sugar Land, Texas)--Natural gas and natural gas liquids transmission provider MarkWest Energy Partners LP (NYSE:MWE) reported strong gains in revenue and earnings for the first quarter of 2014, based largely on significantly stronger gathering and processing volumes--especially in the Utica and Marcellus shales, where increased activity boosted the company's processed volumes about 58%. Net income was reported to be $12.49 million, compared with a net loss of $15.46 million in first-quarter 2013.

Total revenues stood at $512.48 million, a 37.29% increase from the same period last year. During the quarter, MarkWest began operations at two major facilities in the Utica Shale: the 200 million-cubic-foot-per-day Seneca II processing plant in Seneca, Ohio, and a fractionation and marketing complex in Hopedale, Ohio. The Hopedale facility features more than 230,000 barrels of purity product storage and a 60,000-barrel-per-day fractionator for propane and heavier purified products.

In Oklahoma, MarkWest began operations at the 200 million-cubic-foot-per-day Buffalo Creek processing facility in the Granite Wash and the 120 million-cubic-foot-per-day Stonewall processing facility, built in a joint venture with Atlas Pipeline Partners LP (NYSE:APL) (Pittsburgh, Pennsylvania), in the Woodford Shale. The Buffalo Creek facility boosts MarkWest's total processing capacity in the Granite Wash to 435 million cubic feet per day, and the Stonewall facility increases the joint venture's processing capacity to 220 million cubic feet per day.

MarkWest also announced during the quarter that it would increase total processing capacity at two major facilities in the Marcellus Shale, each by 200 million cubic feet per day: the Mobley complex in Wetzel County, West Virginia, which will be increased to 920 million cubic feet per day; and the Sherwood complex in Doddridge County, West Virginia, which will be increased to 1.2 billion cubic feet per day. Both expansions, which involve the construction of new processing plants, are expected to be in service by the second quarter of 2015.

Capital expenditures for the quarter totaled $587.12 million, compared with $631.56 million in first-quarter 2013. (The previous year's quarter comes down to $366.24 million when excluding contributions from joint ventures.)

Industrial Info is tracking more than $3.1 billion in active projects involving MarkWest, including two expansions at natural gas processing plants in Cadiz, Ohio, and Evans City, Pennsylvania. The $200 million Cadiz project involves adding capacity for 200 million standard cubic feet per day, which more than doubles overall capacity, while the $70 million Evans City project involves adding capacity for 120 million standard cubic feet per day, which more than triples overall capacity.

"Our major focus continues to be the build-out of midstream infrastructure in the [U.S.] Northeast," said Frank Semple, the chairman, president and chief executive officer of MarkWest, in a conference call. "This investment is beginning to drive significant volume and distributable cash flow growth."

MarkWest's growth capital expenditures for full-year 2014 are expected to be between $2 billion and $2.3 billion, which is narrowed from its previous range of $1.8 billion to $2.3 billion. Maintenance capital expenditures are expected to be about $25 million. The company's total processed volumes are expected to be 60% higher than those in 2013, while 70% of its net operating margin is predicted to be fee-based.

"With the announcements of two additional processing plants this week, we will have in excess of 5 billion cubic feet of processing capacity in the Marcellus and the Utica," Semple said. "Along with our partner EMG [The Energy and Minerals Group], we believe that MarkWest will operate more than two-thirds of the processing and fractionation capacity in the Marcellus and Utica shales. Our plants alone could potentially produce more than 600,000 barrels per day of ethane and heavier natural gas liquids."

For more information, visit Industrial Info's North American Oil & Gas Production Project Database and North American Oil & Gas Transmission Project Database.

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