Natural gas processor and distributor
MarkWest Energy Partners LP
) reported weak fourth quarter 2012 results, reflecting lower
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The partnership's profit per unit - excluding mark-to-market
derivative activity and compensation expense - came in at 22
cents against the Zacks Consensus Estimate of 36 cents.
Colorado-based MarkWest's adjusted earnings per unit also
deteriorated from the year-earlier adjusted figure of 47 cents
Revenue of $371.5 million was up 11.3% from the fourth quarter
2011 level but was below our projection of $402.0 million.
Quarterly Cash Distribution
On Jan 23, 2013, MarkWest raised its fourth quarter 2012 cash
distribution by 1.2% sequentially and 7.9% year over year to 82
cents per unit ($3.28 per unit annualized).
Distributable Cash Flow
During the quarter, MarkWest generated distributable cash flow
("DCF") - an indicator of cash paid out for distribution to
unitholders - of $111.8 million, up from $88.4 million in the
prior-year quarter, providing 1.06x distribution coverage.
Business Units Performance
With regard to business units, the Southwest segment's operating
income decreased 34.6% from the year-ago level to $73.2 million,
mainly reflecting lower commodity prices, partially offset by
MarkWest's Northeast segment's operating profit of $31.6 million
fell 21.8% from last year's income of $40.4 million, affected by
lower fractionated volumes.
MarkWest's Liberty segment (the partnership's Marcellus Shale
joint venture), reported a profit of $59.7 million (up by 219.2%
from $18.7 million achieved in the year-earlier period). Improved
natural gas volumes, gathering system throughputs and natural gas
liquids (NGL) sales added up to deliver an impressive quarter.
Operating loss from the partnership's newest segment - Utica -
was $1.3 million.
Capital Expenditure & Balance Sheet
During the quarter, MarkWest spent approximately $709.8 million
on growth capital projects, an increase of $525.9 million
compared to the year-ago period. As of Dec 31, 2012, the
partnership had total outstanding debt of approximately $2.5
billion, representing a debt-to-capitalization ratio of about
Management maintained its projected DCF range of $500-$575
million for 2013 while its growth capital expenditure was pegged
in the vicinity of $1.5-$1.8 billion.
Stocks to Consider
MarkWest Energy currently carries a Zacks Rank #4 (Sell),
implying that it is expected to underperform the broader U.S.
equity market over the next one-to-three months.
Meanwhile, one can look at other energy firms like
Breitburn Energy Partners LP
Memorial Production Partners LP
) as attractive investments. All these firms - sporting a Zacks
Rank #2 (Buy) - offer value and are worth accumulating at current