MarkWest Energy Partners, L.P. (NYSE: MWE) today announced that the
General Partner of MarkWest Energy Partners, L.P. and the Audit
Committee of its Board of Directors determined it is necessary to
restate the Partnership’s consolidated
financial statements for the years ended December 31, 2006 and 2005,
including the quarters therein, and the quarters ended March 31 and June
30, 2007. As discussed below, the restatement does not result in a
change to the consolidated balance sheets, net income, consolidated
statements of cash flows, or distributable cash flow for such periods.
The restatements will be filed in a Form 10-K/A for the year ended
December 31, 2006, and Forms 10-Q/A for the first and second quarters of
fiscal 2007. A table summarizing the restatements is included within
this press release.
The restatement followed an extensive review by MarkWest of its
accounting for revenue arrangements consistent with Emerging Issues Task
Force Issue No. 99-19, Reporting Revenue Gross as a Principal versus Net
as an Agent, during which MarkWest concluded that certain transactions
in the Partnership’s East Texas segment were
incorrectly recorded net as an agent instead of being recorded gross as
a principal. The reclassification has the effect of increasing the
revenue line item "Unaffiliated parties" and increasing, by the same
amount, "Purchased product costs."
While this reclassification of revenue and expenses within the
consolidated statements of operations does not affect the consolidated
balance sheets, net income, the consolidated statements of stockholders'
equity, consolidated statements of cash flows, or distributable cash
flow, the Audit Committee and management determined that the
misstatement required a restatement of the consolidated statements of
operations.
The Partnership's management and Audit Committee consulted with Deloitte
& Touche LLP, the Partnership's independent registered public accounting
firm, in reaching the conclusion to restate the financial statements.
The following tables present the impact of the restatement on the
affected line items of the Condensed Consolidated Statements of
Operations for the periods presented (in thousands):
Three months ended June 30, 2007
Six months ended June 30, 2007 As Previously Reported
Restated As Previously Reported
Restated
Total Revenue
$ 136,663
$ 158,558
$ 251,280
$ 289,398
Purchased product costs
74,213
96,108
138,218
176,336
Income from Operations
16,349
16,349
28,182
28,182
Three months ended June 30, 2006
Six months ended June 30, 2006 As Previously Reported
Restated As Previously Reported
Restated
Total Revenue
$ 135,140
$ 147,987
$ 292,122
$ 315,753
Purchased product costs
76,244
89,091
177,205
200,836
Income from Operations
23,311
23,311
45,711
45,711
Three months ended March 31, 2007
Three months ended March 31, 2006 As Previously Reported
Restated As Previously Reported
Restated
Total Revenue
$ 114,617
$ 130,840
$ 156,982
$ 167,766
Purchased product costs
64,005
80,228
100,961
111,745
Income from Operations
11,833
11,833
22,400
22,400
Three months ended September 30, 2006
Nine months ended September 30, 2006 As Previously Reported
Restated As Previously Reported
Restated
Total Revenue
$ 162,657
$ 176,557
$ 454,779
$ 492,310
Purchased product costs
81,632
95,532
258,837
296,368
Income from Operations
40,300
40,300
86,011
86,011
Three months ended December 31, 2006
Year ended December 31, 2006 As Previously Reported
Restated As Previously Reported
Restated
Total Revenue
$ 121,173
$ 137,601
$ 575,952
$ 629,911
Purchased product costs
63,441
79,869
322,278
376,237
Income from Operations
17,224
17,224
103,235
103,235
Year ended December 31, 2005 As Previously Reported
Restated
Total Revenue
$ 499,084
$ 541,090
Purchased product costs
366,878
408,884
Income from Operations
33,312
33,312
MarkWest Energy Partners, L.P. is a publicly traded master limited
partnership with a solid core of midstream assets and a growing core of
gas transmission assets. It is the largest processor of natural gas in
the Northeast and is the largest gas gatherer of natural gas in the
prolific Carthage field in east Texas. It also has a growing number of
other gas gathering and intrastate gas transmission assets in the
Southwest, primarily in Texas and Oklahoma. 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 Annual Report on Form 10-K for the year
ended December 31, 2006, and our Quarterly Reports on Form 10-Q, as
filed with the SEC. Although we believe that the expectations reflected in the
forward-looking statements, specifically those referring to future
performance, growth, cash flow, operating income, distributable cash
flow (DCF), distributions, or other factors, are reasonable, these
forward-looking statements are not guarantees of future performance, and
we can give no assurance that such expectations will prove to be correct
and that projected performance or distributions may not be achieved. Among
the factors that could cause results to differ materially are those
risks discussed in our Form S-1, as amended, our Annual Report on Form
10-K for the year ended December 31, 2006, as amended, and our Quarterly
Reports on Form 10-Q, each as filed with the SEC. You are also
urged to carefully review and consider the cautionary statements and
other disclosures, including those under the heading "Risk
Factors,” made in those filings, which
identify and discuss significant risks, uncertainties and various other
factors that could cause actual results to vary significantly from those
expressed or implied in the forward-looking statements. We do not
undertake any duty to update any forward-looking statement. MarkWest Energy Partners and MarkWest Hydrocarbon will file a joint
proxy statement/prospectus and other documents with the Securities and
Exchange Commission (the "SEC") in relation to the merger transaction
announced on September 5, 2007. Investors and security holders
are urged to read these documents carefully when they become available
because they will contain important information regarding MarkWest
Energy Partners, MarkWest Hydrocarbon, and the transaction. A definitive
joint proxy statement/prospectus will be sent to security holders of
MarkWest Energy Partners and MarkWest Hydrocarbon seeking their approval
of the transactions contemplated by the redemption and merger agreement.
Investors and security holders may obtain a free copy of the joint proxy
statement/prospectus (when it is available) and other documents
containing information about MarkWest Energy Partners and MarkWest
Hydrocarbon, without charge, at the SEC’s
website at www.sec.gov. Copies of the
joint proxy statement/prospectus and the SEC filings that will be
incorporated by reference in the joint proxy statement/prospectus may
also be obtained free of charge by directing a request to the entities'
investor relations department at 866-858-0482, or by accessing their
website at www.markwest.com. MarkWest Energy Partners, MarkWest Hydrocarbon, the officers and
directors of the general partner of MarkWest Energy Partners, and the
officers and directors of MarkWest Hydrocarbon may be deemed to be
participants in the solicitation of proxies from their security holders.
Information about these persons can be found in the Annual Report on
Form 10-K for each of MarkWest Energy Partners and MarkWest Hydrocarbon,
as filed with the SEC, and additional information about such persons may
be obtained from the joint proxy statement/prospectus when it becomes
available. This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any
sale of securities in any jurisdiction in which such offer,
solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. No
offering of securities shall be made except by means of a prospectus
meeting the requirements of the Securities Act of 1933, as amended.
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