MarkWest Energy Partners L.P.
) and its subsidiary MarkWest Energy Finance Corporation have
priced an offering of 4.5% senior unsecured notes of $1.0
billion, due in 2023.
MarkWest expects the proceedings to be over on January 10, 2013,
subject to customary closing conditions.
Denver, Colorado-based MarkWest Energy Partners LP, a master
limited partnership (MLP), is engaged in the gathering,
processing and transmission of natural gas, transportation,
fractionation and storage of natural gas liquids (NGLs), and the
gathering and transportation of crude oil.
The partnership reported weak third quarter 2012 results,
reflecting lower commodity prices. Its profit per unit -
excluding mark-to-market derivative activity and compensation
expense - came in at 26 cents, against the Zacks Consensus
Estimate of 37 cents. Also, adjusted earnings per unit
deteriorated from the year-earlier earnings of 35 cents per unit.
MarkWest ended the third quarter of 2012 with total debt of
approximately $2.5 billion, representing a debt-to-capitalization
ratio of about 49.1%. With the sale of new notes,
debt-to-capitalization ratio will now be 57.3%.
We like MarkWest's high-quality and diverse portfolio of
midstream assets, which generate stable and recurring revenues by
way of long-term fee-based contracts. It is one of the largest
processors of natural gas in the Northeast and the largest
gatherer of natural gas in the prolific Carthage field in East
However, gathering and processing MLPs, like MarkWest, are more
sensitive to commodity prices compared with other MLP subgroups.
As a result, collapsing energy prices have adversely affected
their cash flow stability.
MarkWest - in partnership with
Sunoco Logistics Partners L.P.
) for the construction of a distribution system to transport
ethane produced in the Marcellus Shale Basin to markets along the
Gulf Coast - currently retains a Zacks #3 Rank (short-term Hold
rating). We are also maintaining our long-term Neutral
recommendation on the stock.
MARKWEST EGY PT (MWE): Free Stock Analysis
SUNOCO LOGISTIC (SXL): Free Stock Analysis
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