Midstream operators MarkWest Energy Partners and DCP Midstream Partners each had strong first quarters, opening a plethora of infrastructure and processing facilities in U.S. shale plays, and recording significant earnings increases, the companies said in separate announcements this week.
MarkWest reported record volumes and cashflow from both its Marcellus and Utica segments in 1Q2014, CEO Frank Semple said during a conference call with analysts Thursday. Process volumes in the Marcellus were 1.64 Bcf/d, a nearly 100% increase compared with 1Q2014; Utica processed volumes reached 0.25 Bcf/d in 1Q2014 from almost nothing in 1Q2013. Total system volumes increased 41% compared with 1Q2013.
"Our major focus continues to be the buildout of midstream infrastructure in the Northeast, and these investments are beginning to drive significant volume and DCF [distributable cash flow) growth," Semple said.
Processing volumes in the Marcellus this year are expected to increase by 75% compared with 2013 volumes. "This significant growth is due to the ongoing success of our producers' drilling programs, and we are excited to continue developing critical midstream infrastructure on their behalf."
On Tuesday, Markwest said it would add another 400 MMcf/d of rich gas processing capacity by building two cryogenic plants at existing facilities serving Marcellus Shale production in West Virginia (see Shale Daily, May 7).
MarkWest, the Appalachian Basin's largest processor and fractionator, has 17 major processing and fractionation projects under development at nine locations in Ohio, West Virginia and Pennsylvania, 11 of which it expects to complete this year that would bring its Northeast capacity to 4 Bcf/d and 250,000 b/d. Management has said for the last couple of years that it cannot build processing facilities fast enough to match the rate of production in the region, where the company says it has spent about two-thirds of its budget since 2002 when it was founded (see Shale Daily,Feb. 3).
During the first quarter, MarkWest placed into service a 200 MMcf/d processing plant in the Granite Wash, a 200 MMcf/d processing plant in the Utica Shale and a 60,000 b/d fractionator with associated natural gas liquids (NGL) logistics facilities at the Hopedale complex in Harrison County, OH.
MarkWest reported earnings before interest, taxes, depreciation and amortization (EBITDA) of $187.6 million in 1Q2014, up 33% from $140.8 million in 1Q2013.
DCP Midstream Partners (DCP) officials on Tuesday said the company started 2014 "strong," placing its Goliad plant (a 200 MMcf/d processing plant in the Eagle Ford system), the 50 MMcf/d O'Connor plant expansion and the 435-mile Front Range NGL pipeline all into service in 1Q2014.
"Strong volumes and recoveries from our Eagle Ford system drove record first quarter results in our Natural Gas Services segment and more than offset slightly lower results in our NGL Logistics and Wholesale Propane segments," said Bill Waldheim, president of the Partnership.
DCP also completed a $1.15 billion immediately accretive dropdown, the largest dropdown in its history, during 1Q2014. The dropdown from DCP Midstream, the owner of the partnership's general partner, included a one-third interest in the 720-mile Sand Hills NGL pipeline, a one-third interest in the 800-mile Southern Hills NGL pipeline, the remaining 20% interest in the Eagle Ford system, and Lucerne 1, a 35 MMcf/d cryogenic natural gas processing plant in the prolific DJ Basin. And DCP began funding the $250 million Lucerne 2 plant, a 200 MMcf/d organic growth project that is expected to be placed into service in mid-2015.
DCP reported 1Q2014 EBITDA of $138 million, a 38% increase compared with $100 million in 1Q2013.