<

Must-know highlights from MarkWest Energy Partners' analyst day

Part 7
Must-know highlights from MarkWest Energy Partners' analyst day (Part 7 of 8)

Must-know: MarkWest Energy Partners’ guidance for 2014

Distribution

MWE maintained its distributable cash flow forecast of $600 million to $690 million in 2014. The company will earn the majority of this cash in the second half of 2014.

MWE DCF ForecastEnlarge Graph

On April 23, 2014, MarkWest Energy raised its first quarter 2014 cash distribution to $0.87 per common unit. This was an increase of 1.2% sequentially and 4.8% year-over-year. On an annualized basis, the distribution was $3.48 per unit and represents a coverage ratio of 1.05x for the first quarter. MarkWest management expects the distribution growth to increase 5% in 2014, 7% in 2015, and 10% in 2016.

For context, we’ve provided a comparison of distributions and yield and how MWE is trading compared to its competitors, which include DCP Midstream (DPM), Kinder Morgan Partners (KMP), Regency Energy Partners (RGP), and Targa Resources (NGLS). All these companies are part of the Alerian MLP ETF (AMLP).

MWE Vs CompetitorsEnlarge Graph

Capital expenditure

MarkWest has forecasted that it will spend $2 billion to $2.3 billion for its major growth projects in 2014. The 2015 capex will be approximately $2 billion. This year, MarkWest will spend 69% of its capex on the Marcellus segment, 24% on the Utica segment, and 7% on the Southwest segment.

MWE's capex in 2014Enlarge Graph

Fee-based margins

Plus, fee-based margins for this quarter are stated to be more than 70%.

MWE’s Fee-based Operating MarginEnlarge Graph

As a result of growing fee-based income, MWE’s DCF will depend less on commodity price changes and more on volume changes.

The Realist Discussions