MWE » Topics » Appalachia

This excerpt taken from the MWE 10-Q filed Aug 11, 2008.
Appalachia. We are the largest processor of natural gas in the Appalachian basin, with fully integrated processing, fractionation, storage and marketing operations. The Appalachian basin is a large natural gas producing region characterized by long-lived reserves and modest decline rates. Our Appalachian assets include the Kenova, Boldman, Cobb and Kermit natural gas processing plants, an NGL pipeline, the Siloam NGL fractionation plant and two caverns for storing propane. As part of our organic growth budget for 2008, we estimate we will spend approximately $60 million to significantly expand our gas processing and fractionation capacity in Appalachia. These expansions include replacing our existing Boldman and Cobb processing plants with cryogenic processing facilities and modifying the Kenova processing plant for greater propane recovery to increase production. To support the processing plant expansions, we will increase the capacity at our Siloam fractionation facility by 50 percent, or approximately 300,000 gallons per day. The Kenova upgrade was completed in April 2008. The Siloam facility expansion is expected to be completed in the third quarter of 2008, and the Boldman and Cobb expansions in early 2009.

 

·                 

These excerpts taken from the MWE 10-K filed Feb 29, 2008.

Appalachia

 
  Year ended December 31,
 
  2006
  2005
 
  (in thousands)
Revenue            
  Unaffiliated   $ 2,027   $ 1,686
  Affiliated     73,636     64,922
   
 
Total revenues     75,663     66,608
   
 

Operating expenses:

 

 

 

 

 

 
    Purchased product costs     43,648     38,435
    Facility expenses     13,997     19,360
    Depreciation     3,573     3,187
    Accretion of asset retirement obligations     12     41
   
 
      Total operating expenses before selling, general and administrative expenses     61,230     61,023
   
 

Operating income before selling, general and administrative expenses

 

$

14,433

 

$

5,585
   
 

        Revenues:    Total revenues increased $9.1 million, or 14%, during the year ended December 31, 2006, relative to the comparable period in 2005. The increase was primarily a result of higher prices and volumes for our Maytown NGLs in 2006. Higher gas volumes at the Kenova and Cobb plants and higher liquid volumes at the Kenova, Cobb and Boldman plants also contributed to the increase; however, these results were offset slightly by lower gas volumes at Boldman.

        Purchased Product Costs:    Purchased product costs increased $5.2 million, or 14%, during the year ended December 31, 2006, relative to the comparable period in 2005. The rise in costs is primarily a result of higher product prices. The increase was partially offset by reduced trucking expenses amounting to $1.4 million associated with our continuing repair of the ALPS pipeline in 2005 versus the shutdown of the ALPS pipeline in late 2006.

        Facility Expenses:    Facility expenses decreased $5.4 million, or 28%, during the year ended December 31, 2006, relative to the comparable period in 2005. These expenses were higher in 2005 due to costs incurred to repair the ALPS pipeline.

        Depreciation:    Depreciation expense increased $0.4 million, or 12%, during the year ended December 31, 2006, relative to the comparable period in 2005, due to increased capitalized leasehold improvements associated with the ALPS pipeline.

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Appalachia









































































































































































 
 Year ended December 31,
 
 2006
 2005
 
 (in thousands)
Revenue      
 Unaffiliated $2,027 $1,686
 Affiliated  73,636  64,922
  
 
Total revenues  75,663  66,608
  
 


Operating expenses:

 

 


 

 

 


 
  Purchased product costs  43,648  38,435
  Facility expenses  13,997  19,360
  Depreciation  3,573  3,187
  Accretion of asset retirement obligations  12  41
  
 
   Total operating expenses before selling, general and administrative expenses  61,230  61,023
  
 


Operating income before selling, general and administrative expenses

 

$


14,433

 

$


5,585
  
 




        Revenues:    Total revenues increased $9.1 million, or 14%, during the year ended December 31, 2006, relative to
the comparable period in 2005. The increase was primarily a result of higher prices and volumes for our Maytown NGLs in 2006. Higher gas volumes at the Kenova and Cobb plants and higher liquid volumes
at the Kenova, Cobb and Boldman plants also contributed to the increase; however, these results were offset slightly by lower gas volumes at Boldman.



        Purchased Product Costs:    Purchased product costs increased $5.2 million, or 14%, during the year ended
December 31, 2006, relative to the comparable period in 2005. The rise in costs is primarily a result of higher product prices. The increase was partially offset by reduced trucking expenses
amounting to $1.4 million associated with our continuing repair of the ALPS pipeline in 2005 versus the shutdown of the ALPS pipeline in late 2006.



        Facility Expenses:    Facility expenses decreased $5.4 million, or 28%, during the year ended December 31, 2006,
relative to the comparable period in 2005. These expenses were higher in 2005 due to costs incurred to repair the ALPS pipeline.




        Depreciation:    Depreciation expense increased $0.4 million, or 12%, during the year ended December 31, 2006,
relative to the comparable period in 2005, due to increased capitalized leasehold improvements associated with the ALPS pipeline.



61








This excerpt taken from the MWE 8-K filed Nov 9, 2007.

 Appalachia.

 

 Frank Semple  - MarkWest Hydrocarbon, Inc. - President, CEO.

 

 Yeah, it’s been the operations have been fairly flat. When you talk about the range of variance that we’ve seen this year, that’s really explained by just operational issues, downstream pipeline. Issues that we’ve had a couple of minor processing issues that we’ve had to deal with I call it “gas quality” issues that we’ve had to deal with so they’re really just the expected volume metric changes you’d just due to operational issues, normal operational issues. There has been no consistent decline issue. In fact, that basin, as you know, is very prolific, a lot of drilling going on. Really, the overall volume in the production and processing out of that area is really tied to the downstream capacity and there are a lot of projects that help improve that significantly. So, as I mentioned earlier in my formal comments, we’re excited about the opportunities that present themselves in Appalachia, simply because of all of the new capital that is being invested down hole, and the need for additional processing capabilities in that area. Hopefully that helps you.

 

 Jin Lu  - J.P. Morgan - Analyst

 

This excerpt taken from the MWE 10-Q filed Nov 8, 2007.

Appalachia

 
  Nine months ended September 30,
 
  2007
  2006
 
  (in thousands)

Revenues:            
  Unaffiliated   $ 1,444   $ 1,303
  Affiliated     59,047     55,288
   
 
    Total revenue     60,491     56,591
   
 

Operating expenses:

 

 

 

 

 

 
  Purchased product costs     38,593     32,381
  Facility expenses     10,970     10,378
  Depreciation     2,649     2,652
  Accretion of asset retirement obligations     10     9
   
 
    Total operating expenses before selling, general and administrative expenses     52,222     45,420
   
 

Operating income before items not allocated to segments

 

$

8,269

 

$

11,171
   
 

        Revenue.    Total revenue increased $3.9 million, or 7%, during the nine months ended September 30, 2007, compared to the corresponding period in 2006. The change was related to a 3,500 Gal/d increase in volumes and a $0.07 per gallon price increase at our Maytown facility, resulting in a $3.2 million increase in our revenue. We also incurred a $0.3 million increase in revenue associated with purging of the ALPS pipeline resulting from its shutdown in late 2006. These increases were partially offset by lower volumes at our Boldman facility caused by a temporary shutdown for maintenance and repair work during the first quarter of 2007.

        Purchased Product Costs.    Purchased product costs increased $6.2 million, or 19%, during the nine months ended September 30, 2007, compared to the corresponding period in 2006. The rise in costs is

43



primarily a result of volumes and prices increasing at the Maytown facility, which accounted for $2.9 million of the overall increase. Trucking expenses associated with the shutdown of the ALPS pipeline added $3.0 million to the increase.

This excerpt taken from the MWE 10-K filed Nov 5, 2007.

Appalachia

 
  Year ended December 31,
   
   
 
 
  2005
  2004
  $ Change
  % Change
 
 
  (in thousands)

   
   
 
Revenues:                        
  Unaffiliated   $ 1,763   $ 1,610   $ 153   10 %
  Affiliated     64,845     59,026     5,819   10 %
   
 
 
     
Total revenues     66,608     60,636     5,972   10 %
   
 
 
     

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 
  Purchased product costs     38,435     30,031     8,404   28 %
  Facility expenses     19,360     13,444     5,916   44 %
  Depreciation     3,187     4,329     (1,142 ) (26 )%
  Impairment         130     (130 ) (100 )%
  Accretion of asset retirement obligations     41         41   NA  
   
 
 
     
    Total operating expenses before selling, general and administrative expenses     61,023     47,934     13,089   27 %
   
 
 
     
Operating income before selling, general and administrative expenses   $ 5,585   $ 12,702   $ (7,117 ) (56 )%
   
 
 
     

        Revenues.    Revenues increased 10% during the year ended December 31, 2005, relative to the comparable period in 2004 primarily as a result of price increases. An inlet volume decrease of $0.5 million offset this increase.

        Purchased Product Costs.    Purchased product costs increased 28% during the year ended December 31, 2005, relative to the comparable period in 2004 due to a price increase. The remainder of the increase is attributable to trucking costs of approximately $2.0 million incurred to transport product from our Maytown and Boldman plants to our Siloam fractionation plant as a result of the November 2004 pipeline failure.

        Facility Expenses.    Facility expenses increased 44% during the year ended December 31, 2005, relative to the comparable period in 2004, primarily due to $5.0 million of repairs and refurbishment costs.

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        Depreciation.    Depreciation expense decreased 26% during the year ended December 31, 2005, relative to the comparable period in 2004 due to accelerated Cobb plant depreciation recorded in 2004.

This excerpt taken from the MWE 10-Q filed Nov 5, 2007.

Appalachia

 
  Six months ended June 30,
 
  2007
  2006
 
  (in thousands)

Revenues:            
  Unaffiliated   $ 953   $ 849
  Affiliated     38,329     35,594
   
 
    Total revenue     39,282     36,443
   
 
Operating expenses:            
  Purchased product costs     24,704     20,457
  Facility expenses     7,044     6,815
  Depreciation     1,785     1,738
  Accretion of asset retirement obligations     7     6
   
 
    Total operating expenses before selling, general and administrative expenses     33,540     29,016
   
 
Operating income before items not allocated to segments   $ 5,742   $ 7,427
   
 

42


        Revenue.    Total revenue increased $2.8 million, or 8%, during the six months ended June 30, 2007, compared to the corresponding period in 2006. The change was related to a 6,000 Gal/d increase in volumes and a $0.04 per gallon price increase at our Maytown facility, resulting in a $1.2 million increase in our revenue. We also experienced an increase in keep-whole gas volumes at the Cobb facility as well as increases in keep-whole gas liquid volumes at the Cobb and Kenova facilities in 2007. Finally, we incurred a $0.3 million increase in revenue associated with purging of the ALPS pipeline resulting from its shutdown in late 2006. These increases were partially offset by lower volumes at our Boldman facility caused by a temporary shutdown for maintenance and repair work.

        Purchased Product Costs.    Purchased product costs increased $4.2 million, or 21%, during the six months ended June 30, 2007, compared to the corresponding period in 2006. The rise in costs is primarily a result of volumes increasing by 6,000 Gal/d and prices increasing by $0.39 per gallon at the Maytown facility, which accounted for $1.9 million of the overall increase. Additionally, trucking expenses associated with the shutdown of the ALPS pipeline added $2.1 million to the increase.

This excerpt taken from the MWE 10-Q filed Aug 4, 2006.

Appalachia

 
  Six months ended June 30,
   
   
 
 
   
  % Change
 
 
  2006
  2005
  $ Change
 
 
  (in thousands)

   
   
 
Revenue                        
  Unaffiliated   $ 849   $ 865   $ (16 ) (2 )%
  Affiliated     35,594     30,511     5,083   17 %
   
 
 
     
Total revenues     36,443     31,376     5,067   16 %
   
 
 
     
Operating expenses:                        
  Purchased product costs     20,457     17,913     2,544   14 %
  Facility expenses     6,815     8,870     (2,055 ) (23 )%
  Depreciation     1,738     1,645     93   6 %
  Accretion of asset retirement obligations     6         6   NA  
   
 
 
     
    Total operating expenses before selling, general and administrative expenses     29,016     28,428     588   2 %
   
 
 
     
Operating income before selling, general and administrative expenses   $ 7,427   $ 2,948   $ 4,479   152 %
   
 
 
     

        Revenues:    Total revenues increased $5.1 million, or 16%, during the six months ended June 30, 2006, relative to the comparable period in 2005. The increase was primarily a result of higher sales prices for our Maytown natural gas liquids in 2006. Higher gas and liquid volumes at the Cobb Plant and higher liquids volumes at the Boldman plant also contributed to the increase, however, such results are offset slightly by lower liquid volumes at Kenova and lower gas volumes at Boldman.

        Purchased Product Costs:    Purchased product costs increased $2.5 million, or 14%, during the six months ended June 30, 2006, relative to the comparable period in 2005. The rise in costs is primarily a result of higher product prices. The increase was partially offset by reduced trucking expenses, as we have been able to utilize our ALPS pipeline after repairs in 2005.

        Facility Expenses:    Facility expenses decreased $2.1 million, or 23%, during the six months ended June 30, 2006, relative to the comparable period in 2005. These expenses were higher in 2005 due to costs incurred to repair the ALPS pipeline.

47



        Depreciation:    Depreciation expense increased $0.1 million, or 6%, during the six months ended June 30, 2006, relative to the comparable period in 2005, due to increased capitalized leasehold improvements associated with the ALPS pipeline.

This excerpt taken from the MWE 10-K filed Jun 20, 2006.
Appalachia.  We are the largest processor of natural gas in the Appalachian Basin with fully integrated processing, fractionation, storage and marketing operations.  The Appalachian Basin is a large natural gas-producing region characterized by long-lived reserves and modest decline rates.  Our Appalachian assets include five natural gas-processing plants, an NGL pipeline, an NGL fractionation plant and two caverns for storing propane.

 

     

This excerpt taken from the MWE 10-Q filed Jun 20, 2006.
Appalachia. We are the largest processor of natural gas in the Appalachian Basin with fully integrated processing, fractionation, storage and marketing operations. The Appalachian Basin is a large natural gas-producing region characterized by long-lived reserves and modest decline rates. Our Appalachian assets include five natural gas-processing plants, an NGL pipeline, an NGL fractionation plant and two caverns for storing propane.

 

     

This excerpt taken from the MWE 10-Q filed May 4, 2006.
Appalachia. We are the largest processor of natural gas in the Appalachian Basin with fully integrated processing, fractionation, storage and marketing operations. The Appalachian Basin is a large natural gas-producing region characterized by long-lived reserves and modest decline rates. Our Appalachian assets include five natural gas-processing plants, an NGL pipeline, an NGL fractionation plant and two caverns for storing propane.

 

     

This excerpt taken from the MWE 10-Q filed May 3, 2006.
Appalachia. We are the largest processor of natural gas in the Appalachian Basin with fully integrated processing, fractionation, storage and marketing operations. The Appalachian Basin is a large natural gas-producing region characterized by long-lived reserves and modest decline rates. Our Appalachian assets include five natural gas-processing plants, an NGL pipeline, an NGL fractionation plant and two caverns for storing propane.

 

     

This excerpt taken from the MWE 10-K filed Mar 16, 2006.
Appalachia.  We are the largest processor of natural gas in the Appalachian Basin with fully integrated processing, fractionation, storage and marketing operations.  The Appalachian Basin is a large natural gas-producing region characterized by long-lived reserves and modest decline rates.  Our Appalachian assets include five natural gas-processing plants, an NGL pipeline, an NGL fractionation plant and two caverns for storing propane.

 

     

This excerpt taken from the MWE 8-K filed Dec 8, 2005.

Appalachia

 

                  5 processing plants with 352 MMcf/d capacity

                  NGL fractionation plant

                  136 mile NGL pipeline

                  11 million gallon NGL storage facility

 

This excerpt taken from the MWE 10-K filed Jun 24, 2005.

Appalachia

 

In Appalachia, our primary sources of revenues are our processing, transportation, fractionation and storage agreements with MarkWest Hydrocarbon, which are described under “Our Contracts with MarkWest Hydrocarbon” included herein, and under “Agreements with MarkWest Hydrocarbon” included in Item 13 of this Form 10-K and our agreement with a producer relating to processing services at our Maytown facility. Under the terms of this gas processing agreement, the producer agrees to deliver to us all gas now or subsequently produced from specified wells, plus gas attributable to the interests of third parties that is currently being delivered into the producer’s gathering system (to the extent the producer has the right to process such third-party gas). The producer also grants us the exclusive right to process all of this natural gas and conveys to us title to the extracted NGLs.

 

We are responsible for processing all gas delivered to our Maytown plant by the producer and must deliver residue gas to the producer at a specified gas delivery point.  The parties have agreed that the producer will provide certain operating services for the Maytown facility.

 

As compensation for our services, we earn both a fee for our transportation and fractionation services as well as receive a percentage of the proceeds from the sale of NGLs produced on the producer’s behalf. A portion of the transportation and fractionation fee is subject to annual adjustment in proportion to the annual average percentage change in the Producer Price Index for Oil and Gas Field Services. MarkWest Hydrocarbon, in a separate agreement, has agreed to buy the NGLs from us and pay us a purchase price equal to the proceeds it receives from the resale of such NGLs to third parties.  The initial term of our gas processing agreement with the producer runs through February 2015.

 

The operating revenues we earn under the percent-of-proceeds component of the gas processing agreement will fluctuate with the sales price for the NGLs produced.

 

This excerpt taken from the MWE 8-K filed Feb 4, 2005.

Appalachia

            ALPs integrity management, Maytown pipeline system

 

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