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The Zacks Analyst Blog Highlights: Steel Dynamics, MarkWest Energy Partners, PDC Energy, Helmerich & Payne and Range Resources

Zacks Equity Research

For Immediate Release

Chicago, IL – March 21, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Steel Dynamics, Inc. (STLD), MarkWest Energy Partners LP (MWE), PDC Energy Inc. (PDCE), Helmerich & Payne Inc (HP) and Range Resources Corporation (RRC).

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Here are highlights from Wednesday’s Analyst Blog:

Steel Dynamics Gives 1Q Outlook

Steel producer Steel Dynamics, Inc. (STLD) provided its first quarter 2013 earnings guidance in the range of 17 cents to 21 cents per share. The company reported earnings of 20 cents per share in the first quarter of 2012.

Steel Dynamics expects overall steel shipments for the first quarter 2013 to be considerably flat sequentially due to an expected fall in galvanized sheet volumes, partially offset by increased long product shipments, including engineered special-bar-quality products, standard railroad rail and wide flange products.

Segment Outlook

Steel Dynamics expects its metals recycling operation’s financial results to deteriorate slightly in the first quarter 2013 on a sequential basis, as a projected increase in shipping volumes will be more than offset by decreased margins.

Steel fabrication operations segment of Steel Dynamics is anticipated to be profitable for the fifth consecutive quarter, due to the slow improvement in the non-residential construction activity.

Steel Dynamics believes that its performance will be positively impacted by strong residential construction market, automotive and manufacturing markets and improvements in the non-residential construction demand. However, there is an apprehension that Steel Dynamics may be negatively impacted by the global economic uncertainty, which affects customer confidence and buying patterns.

Steel Dynamics released its fourth-quarter 2012 results on Jan 28. The company reported adjusted earnings (excluding positive tax adjustments) of 20 cents per share in the fourth quarter compared with 14 cents in the same period last year. Earnings surpassed the Zacks Consensus Estimate of 15 cents. Profit for the quarter doubled to $60.5 million from $30.2 million in the prior-year quarter.

Revenues decreased 8.3% year over year to $1,705 million in the fourth quarter, but surpassed the Zacks Consensus Estimate of $1,674 million.

Steel Dynamics expects continued demand in the automotive, manufacturing, energy and residential construction sectors and sees signs of improvement in the nonresidential construction sector. Steel Dynamics believes their current capital projects will deliver products that surpass customer’s expectations. Steel Dynamics prospects are to execute its strategic growth plans.

MarkWest Inks Deal with PDC Energy

MarkWest Utica EMG – a joint venture between pipeline operator MarkWest Energy Partners LP (MWE) and energy infrastructure private equity fund The Energy and Minerals Group – has entered into a deal with PDC Energy Inc. (PDCE) – an independent energy firm.   

Per the agreement, MarkWest will purvey gathering, processing, fractionation and marketing services in Utica Shale region for PDC Energy. Utica Shale is basically a rock unit and has a huge potential of becoming a natural gas resource. Utica Shale underlies parts of Kentucky, Maryland, New York, Ohio, Pennsylvania, Tennessee, West Virginia and Virginia in the U.S.

By the end of the second quarter of 2013, MarkWest is expected to start gathering and processing of PDC Energy’s liquids-rich gas that will be produced from Guernsey County, Ohio. The initial production from PDC Energy’s operation in the Utica Shale is planned to be processed at Cadiz complex of MarkWest, situated in Harrison County, Ohio.  

PDC Energy’s gas will then be carried to the Seneca complex for further processing, by the second half of 2013. The Seneca complex is based in the Noble County, Ohio.

Along with developing high-grade processing and gathering infrastructure for PDC Energy, MarkWest also plans to finish the installation of fractionation facility in Harrison County, Ohio, by the first quarter of 2014. The facility is expected to have a fractionation capacity of 100,000 barrels of liquid per day.

Denver, Colorado-based MarkWest Energy is a master limited partnership (MLP). The firm 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. MarkWest Energy Partners conducts its operations in four segments: Southwest, Northeast, Liberty and Utica.

Acquisitions have historically played a major role in the partnership’s growth profile and are expected to remain significant. MarkWest Energy may find it difficult to complete accretive transactions in the future, which could negatively impact its growth rate.

MarkWest Energy currently carries a Zacks Rank #5 (Strong Sell), implying that it is expected to significantly underperform the broader U.S. equity market over the next one to three months.    

In the energy sector, Helmerich & Payne Inc (HP) and Range Resources Corporation (RRC) display better fundamentals and currently carry a Zacks Rank #1 (Strong Buy).


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