Natural gas processor and distributor,
MarkWest Energy Partners LP
), reported weak first-quarter 2013 results, reflecting lower
MARKWEST EGY PT (MWE): Free Stock Analysis
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MarkWest's loss per unit - excluding mark-to-market derivative
activity and compensation expense - came in at 21 cents, against
the Zacks Consensus Estimate for a profit of 30 cents per unit.
Colo.-based MarkWest's adjusted loss per unit also deteriorated
from the year-earlier adjusted profit figure of 57 cents per
Revenues of $375.9 million were up 7.3% from the first quarter of
2012 but below our projection of $429.0 million.
Quarterly Cash Distribution
On Apr 25, 2013, MarkWest raised its first-quarter 2013 cash
distribution by 1.2% sequentially and 5.1% year over year to 83
cents per unit ($3.32 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 $110.2 million, up from $109.2 million in the
prior-year quarter, providing 1.02x distribution coverage.
Business Units Performance
With regard to business units, the Southwest segment's operating
income decreased 33.6% from the year-ago level to $66.8 million,
mainly reflecting lower prices for commodity, partially
offset by higher volumes.
MarkWest's Northeast segment's operating profit of $31.2 million
fell 43.2% from last year's income of $54.9 million. The
segment's profit was affected by reduced natural gas liquids
MarkWest's Liberty segment (the partnership's Marcellus Shale
joint venture), reported a profit of $67.1 million (up by 73.4%
from $38.7 million achieved in the year-earlier period). Improved
natural gas volumes, gathering system throughputs and NGL sales
added up to deliver an impressive quarter.
Operating loss from the partnership's newest segment - Utica -
was $2.0 million.
Capital Expenditure & Balance Sheet
During the quarter, MarkWest spent approximately $629.7 million
on growth capital projects, an increase of $381.7 million
compared to the year-ago period. As of Mar 31, 2013, the
partnership had total outstanding debt of approximately $3.0
billion, representing a debt-to-capitalization ratio of about
Management lowered the range of DCF to $500-$540 million for 2013
while MarkWest maintained its growth capital expenditure to be in
the vicinity of $1.5-$1.8 billion.
Stocks to Consider
MarkWest currently carries a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next one-to-three months.
Meanwhile, one can look at energy firms like
Atlas Energy LP
SM Energy Company
) as attractive investments. All three firms sport a Zacks Rank
#1 (Strong Buy).