MarkWest plans on increasing distribution thru 2020
During the company’s conference call today, Frank Semple, Chairman, President and Chief Executive Officer of MarkWest Energy Partners (ticker: MWE) announced that MWE expects to increase its distribution to approximately $3.70 for this year, $0.16 (or 4.5%) more than the company’s distribution in 2014. Mr. Semple also said that MarkWest expects to continue increasing distributions by 7% to $3.97 in 2016, and 10% for the years of 2017 to 2020.
The dividend increases are likely attributable to MWE’s balance sheet and its ability to effectively manage debt. In EnerCom’s MLP Weekly for the period ended February 20, MWE’s debt to market cap percentage was 30% – well below the industry average of 52%. Its EBITDA margin percentage of 37% is also above the industry average of 23%.
MarkWest exceeded the expectations of analysts like Global Hunter Securities which said: “The midpoint of 2015 EBITDA and DCF guidance was better than our and Street expectations, and distribution guidance for 2016 onwards was better than expectations.”
Expanding with the Panola Pipeline
MWE also announced yesterday that a joint venture to expand the Panola Pipeline was finalized. MarkWest will have a 15% interest in the 60-mile expansion with Enterprise Products Partners (ticker: EPD, 55%), DCP Midstream Partners (ticker: DPM, 15%) and a subsidiary of Anadarko Petroleum (ticker: APC, 15%). “The expansion of the Panola Pipeline system will provide additional capacity for producers’ growing NGL production and enable us to continue growing our midstream presence in Panola County, Texas,” said Mr. Semple. The pipeline currently extends 181 miles across Midcontinent plays and supplies LNG to the Mont Belvieu hub.
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