Must-know: An investor’s guide to MarkWest Energy Partners (Part 3 of 5)
MarkWest’s segment-wise performance
As discussed in the previous section, MarkWest reported strong EBITDA and distributable cash flow (or DCF) growth in 1Q14. The growth was driven by strong gathering and processing volumes in the Marcellus and Utica shales, which boosted volumes by 58%. The following graph shows the revenues generated by the segments for the quarter under consideration.
- Marcellus: this segment processed volumes of 1.6 bcf/d (billion cubic feet per day) in the first quarter—an increase of 17% compared to the previous quarter, and a 98% increase year-over-year (or YoY). Higher natural gas processing volumes were driven by MWE’s producer customers’ drilling programs. In the first quarter, the company completed operations at a natural gas liquid (or NGL) pipeline connecting the NGL infrastructure in the Marcellus Shale. The company also announced construction of an additional 200 MMcf/d (million cubic feet per day) processing plant at the Sherwood Complex in West Virginia. Also, it plans to increase the processing capacity at the Mobley Complex in West Virginia to 920 MMcf/d. In 2014, MWE plans to increase processed volumes by approximately 75% YoY and begin operations at five new processing plants that will increase the total capacity in the Marcellus Shale to nearly 3.2 bcf/d. By the end of 2014, MWE’s full-service midstream system is stated to deliver approximately 3.2 bcf/d of processing capacity, and access to over 200,000 barrels of fractionation capacity per day.
- Utica: Utica processed volumes of 251 MMcf/d—an increase of 51% compared to the previous quarter. In February 2014, MarkWest Utica EMG completed operations at Seneca II, a 200 MMcf/d processing plant at the Seneca Complex in Ohio. The Seneca Complex currently consists of two cryogenic processing plants totaling 400 MMcf/d of capacity. A third 200 MMcf/d plant at the complex was announced in May of 2013 and is expected to be completed during the second quarter of 2014. Also, in February, MarkWest announced development of a fourth processing plant with 200 MMcf/d of capacity, to be operational by mid-2015. Total volumes processed by MWE during the first quarter were over 250 million cubic feet per day. This was an increase of more than 50% when compared to the previous quarter. MWE forecasts the YoY processed volumes to increase by approximately 450%.
- Northeast: this segment saw higher fractionation volumes during this quarter. Last week, MWE announced two additional processing plants for the segment expansion. As a result, MWE will have more than five billion cubic feet of processing capacity in the Marcellus and Utica complexes.
- Southwest: the Southwest segment’s operating income increased 13% YoY and 9% from the previous quarter. The results reflect higher sales volumes from the East Texas system.
Also, in April 2014, the MarkWest’s Centrahoma joint venture with Atlas Pipeline Partners L.P. (APL) finished operations at the Stonewall processing facility—a 120 MMcf/d plant in the Woodford Shale in southwest Oklahoma. The completion of the Stonewall plant increased Centrahoma’s total processing capacity to 220 MMcf/d.
MarkWest has several growth projects planned for 2014. The ETFs that hold MWE include the Alerian MLP ETF (AMLP), the Global X MLP ETF (MLPA), the Alerian Energy Infrastructure ETF (ENFR), and the Global X MLP & Energy Infrastructure ETF (MLPX).
To learn about MWE’s guidance for growth projects in 2014, continue reading the next part of the series.
Browse this series on Market Realist:
- Part 1 - Overview: An introduction to MarkWest Energy Partners
- Part 2 - Must-know: MarkWest’s lower-than-expected 1Q14 earnings
- Part 4 - Why MarkWest provides capex guidance of $2 billion in 2014
- Investment & Company Information
- Marcellus Shale