MarkWest Incurs Loss, Misses Rev - Analyst Blog

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Natural gas processor and distributor, MarkWest Energy Partners LP ( MWE ), reported weak first-quarter 2013 results, reflecting lower commodity prices.

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 unit.

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

Southwest: 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.

Northeast: 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 (NGL) processing.

Liberty: 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.

Utica: 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 48.3%.


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 ( ATLS ), ReneSola Ltd. ( SOL ) and SM Energy Company ( SM ) as attractive investments. All three firms sport a Zacks Rank #1 (Strong Buy).

MARKWEST EGY PT (MWE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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