-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JFpA8HcWZ7PdNky+zb3ZWT0QUGZ+V7cmIrn0mUl3b6g7usRaOWoy0tv3Wi/9fFHd DgI/ll39EiN8GI8IUoKLSg== 0000932384-03-000140.txt : 20030514 0000932384-03-000140.hdr.sgml : 20030514 20030514151214 ACCESSION NUMBER: 0000932384-03-000140 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030514 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARKWEST HYDROCARBON INC CENTRAL INDEX KEY: 0001019756 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 841352233 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14841 FILM NUMBER: 03698684 BUSINESS ADDRESS: STREET 1: 155 INVERNESS DRIVE WEST STREET 2: SUITE 200 CITY: ENGLEWOOD STATE: CO ZIP: 80112-5004 BUSINESS PHONE: 3032908700 MAIL ADDRESS: STREET 1: 155 INVERNESS DRIVE WEST STREET 2: SUITE 200 CITY: ENGLEWOOD STATE: CO ZIP: 80112-5004 8-K 1 a505088.txt (5/14/03) - --------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) May 14, 2003 MARKWEST HYDROCARBON, INC. (Exact name of registrant as specified in its charter) Delaware 1-11566 84-1352233 (State or other jurisdiction (Commission File Number) (I.R.S. Employer incorporation or organization) Identification Number) 155 Inverness Drive West, Suite 200, Englewood, CO 80112-5000 (Address of principal executive offices) Registrant's telephone number, including area code: 303-290-8700 - --------------------------------------------------------------------------- ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 99.1 Press Release dated May 14, 2003 ITEM 9. REGULATION FD DISCLOSURE (INFORMATION PROVIDED UNDER ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION). On May 14, 2003, MarkWest Hydrocarbon, Inc. (the "Company") announced its consolidated financial results for the quarter ended March 31, 2003. A copy of the Company's earnings press release is furnished as Exhibit 99.1 to this report on Form 8-K. The information contained in this report on Form 8-K, including Exhibit 99.1, is being furnished pursuant to Item 12 of Form 8-K under Item 9 of Form 8-K as directed by the Securities and Exchange Commission in Release No. 34-47583. The information contained in this report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed" with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MARKWEST HYDROCARBON, INC. (Registrant) Date: May 14, 2003 By: /s/ Donald C. Heppermann ------------------------------------- Donald C. Heppermann, Senior Vice President, Chief Financial Officer and Secretary EX-99 3 a505083.txt EX.99.1 PRESS RELEASE Exhibit 99.1 MARKWEST LOGO
MarkWest Hydrocarbon, Inc. Contact: John Fox, President and CEO 155 Inverness Drive West, Suite 200 Donald Heppermann, Sr. VP-Finance and CFO Englewood, CO 80112-5000 Phone: (303) 290-8700 (800) 730-8388 E-mail: investorrelations@markwest.com (303) 290-8700 Website: www.markwest.com (303) 290-8769 Fax
MARKWEST HYDROCARBON REPORTS 2003 FIRST QUARTER RESULTS DENVER--May 14, 2003--MarkWest Hydrocarbon, Inc. (AMEX: MWP), today reported first quarter net loss of $1.0 million or $0.12 per share for the quarter ending March 31, 2003, compared to net income of $0.2 million or $0.02 per share for the first quarter of 2002. The continuing unfavorable results of our hedges primarily caused our first quarter 2003 net loss. Hedging losses more than offset the benefits realized from the high natural gas prices that prevailed throughout the first quarter of 2003. Toward the end of the first quarter, natural gas prices began to be unusually high relative to NGL prices. Unusually high natural gas prices adversely impact that portion of our NGL business that is "keep-whole" contract based. This unusual disparity in prices has reduced our internally generated cash flows and may cause limitations on the availability of borrowings under our credit facility. In light of the forecasted reduction in cash flows and possible limits on available borrowings under our credit facility, MarkWest Hydrocarbon has undertaken a series of initiatives to enhance our liquidity position and to take advantage of favorable market valuations of domestic exploration and production assets. Accordingly, we have engaged a third party to act as financial advisor to MarkWest Hydrocarbon to assist in soliciting acquisition proposals for certain of our mature developed oil and gas properties. The expected sale proceeds from these properties would substantially improve our liquidity and allow us to maintain our Canadian drilling program at planned levels. Through our 47 percent-owned subsidiary, MarkWest Energy Partners, L.P., we completed our acquisition of Pinnacle Natural Gas Company and certain affiliates for approximately $38 million on March 28, 2003. The effective date of the merger was January 1, 2003. The acquired assets are comprised of three lateral natural gas pipelines transporting up to 1.1 Bcf/day under firm contracts to power plants and twenty systems gathering more than 44 MMcf/d. Our first quarter results include only four days of Pinnacle's results, in accordance with generally accepted accounting principles. However, during the first three months of 2003, Pinnacle generated approximately $2.2 million of pro forma EBITDA (earnings before interest, taxes, depreciation and amortization). John Fox, President and CEO, commented, "While our hedges have adversely impacted first quarter 2003 results, the majority of these hedges terminate at the end of the year. Conversely, we believe that the high natural gas prices we are experiencing makes it a good time to sell some of our mature exploration and production properties and redeploy the capital into our Canadian drilling program. Furthermore, the acquisition of the Pinnacle companies is highly accretive to MarkWest Energy Partners and our underlying 47 percent ownership in the MLP." EXPLORATION AND PRODUCTION During the first quarter of 2003 MarkWest Hydrocarbon drilled or recompleted 5 (1.875 net) wells in the U.S. and 12 (11.25 net) wells in Canada, resulting in 14 commercial completions and 1 well being evaluated for an alternative zone completion. Our first quarter capital programs led to the addition of approximately 3.5 Bcfe of net proven reserves. Production during the first quarter of 2003 was 2.39 Bcfe (0.87 Bcfe in the U.S. and 1.52 Bcfe in Canada). Our remaining 2003 capital budget plans call for the drilling or recompletion of approximately 11 (5.2 net) more wells in the U.S. In Canada, we plan to drill approximately 36 (33 net) more wells. MIDSTREAM SERVICES MarkWest Hydrocarbon's midstream services business is largely conducted through MarkWest Energy Partners, L.P. (Please see our separate earnings release for MarkWest Energy Partners, L.P.) Appalachia NGL volumes averaged 446,000 gallons per day for the three months ended March 31, 2003, down 7 percent since the first quarter of 2002. Production volumes decreased due to colder than normal weather in the northeastern United States during much of the first quarter, which caused a reduction in the volume of natural gas delivered to our plants. Looking forward, the Pinnacle assets are expected to significantly increase cash flow from operations, as reflected by Pinnacle's pro forma first quarter results. Gathering and processing volumes in Michigan continued to flow substantially higher during the first quarter of 2003 relative to the prior year due to new well connections over the past year. We averaged 15,400 Mcf/d during the three months ended March 31, 2003, compared to 11,000 Mcf/d for the first quarter of 2002. ### MarkWest Hydrocarbon, Inc. (AMEX: MWP), operates in three business segments: exploration and production of natural gas, midstream services, and marketing of natural gas and NGL products. Our exploration and production segment produces natural gas in Alberta, Canada; in the San Juan Basin of Colorado and New Mexico; and in Michigan. In our midstream services segment, which is principally conducted through our 47 percent-owned affiliate, MarkWest Energy Partners, L.P. (AMEX: MWE), we gather natural gas from the wellhead and process the natural gas to remove impurities and the valuable natural gas liquids (NGLs). We also transport natural gas to the end user. MarkWest Hydrocarbon markets its own natural gas and NGL products. This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect our operations, financial performance and other factors as discussed in our filings with the Securities and Exchange Commission. Among the factors that could cause results to differ materially are those risks discussed in our Form 10-K for the year ended December 31, 2002.
MarkWest Hydrocarbon, Inc. Financial and Operating Statistics (in thousands except per share amounts and operating statistics) Three Months Ended March 31, ------------------------------------------------------------------------ 2003 2002 % Change ------------------------------------------------------------------------ Statement of Operations Data Revenues (a) $ 61,310 $ 44,387 38% Net income (loss) $ (1,042) $ 175 NM Basic and diluted earnings (loss) per $ (0.12) $ 0.02 NM share Weighted average shares outstanding 8,511 8,515 -- (basic) Operating Data Exploration and production Natural gas produced (Mcfe/d) 27,500 29,200 (6%) MarkWest Energy Partners (b) Appalachia: Natural gas processed for a fee 264,000 269,000 (2%) (Mcf/d) NGLs fractionated for a fee (gal/day) 446,000 479,000 (7%) Michigan: Gas volume processed for a fee (Mcf/d) 15,400 11,000 40% March 31, 2003 December 31, 2002 March 31, 2002 ------------------------------------------------------------------------ Consolidated Balance Sheet Data Total assets $ 314,081 $ 253,314 $ 239,311 Total debt $ 105,824 $ 64,223 $ 100,936 Stockholders' equity before accumulated other comprehensive $ 61,092 $ 62,210 $ 65,007 income Accumulated other comprehensive income (loss) (c) (6,987) (8,858) (9,418) ------------------------------------------------------------------------ Stockholders' equity $ 54,105 $ 53,352 $ 55,589
(a) Includes gas marketing revenues of $7.8 million and $7.1 million for the three months ended March 31, 2003 and 2002. Gas marketing activities are low margin; these activities are done in support of MarkWest Hydrocarbon's processing business. (b) Reflects MarkWest Hydrocarbon, Inc., until May 23, 2002, and MarkWest Energy Partners, L.P., from May 24, 2002--the date its initial public offering closed. (c) As part of our commodity price risk management strategy, we hedge a portion of our future NGL product, and to a lesser extent natural gas, sales. In addition, this account includes our foreign currency translation adjustment and the effect of interest rate hedges. Balance includes related deferred income taxes. Note that only the only hedge instrument is marked-to-market, not the hedged item. Under a completely effective hedge, these mark-to-market adjustments would offset. MarkWest Hydrocarbon, Inc. Reconciliation of GAAP Measures to Non-GAAP Measures (in thousands) Three Months Ended March 31, 2003 -------------------- Pinnacle pro forma: Revenues $ 18,614 Operating expenses: Purchased product cost 15,305 Plant operating expense 885 Selling, general and administrative 258 Depreciation 1,031 -------------------- Total operating expenses 17,479 -------------------- Income from operations 1,135 Add back: Depreciation 1,031 -------------------- EBITDA $ 2,166 ==================== -----END PRIVACY-ENHANCED MESSAGE-----