Best Oil Stocks To Buy Right Now

Best Oil Stocks To Buy Right Now: Markwest Energy Partners LP (MWE)

MarkWest Energy Partners, L.P. (MarkWest Energy) is a master limited partnership engaged in the gathering, processing and transportation of natural gas; the transportation, fractionation, storage and marketing of natural gas liquids (NGLs), and the gathering and transportation of crude oil. It provides services in the midstream sector of the natural gas industry. The Company also provides processing and fractionation services to crude oil refineries in the Corpus Christi, Texas area through its Javelina gas processing and fractionation facility. As of December 31, 2011, the Company operated in four segments: Southwest, Northeast, Liberty and Gulf Coast. Effective December 31, 2011, the Company acquired the remaining 49% interest in MarkWest Liberty Midstream. On February 1, 2011, the Company acquired Langley processing plant.

Southwest Segment

The Company owns a system in East Texas that consists of natural gas gathering pipelines, centralized compressor stations, a natural gas processing facility and an NGL pipeline. The East Texas system is located in Panola, Harrison and Rusk Counties and services the Carthage Field. Producing formations in Panola County consist of the Cotton Valley, Pettit, Travis Peak and Haynesville formations. During the year ended December 31, 2011, approximately 77% of its natural gas volumes in the East Texas System result from contracts with six producers. The Company sells substantially all of the purchased and retained NGLs produced at its East Texas processing facility to Targa Resources Partners, L.P. (Targa) under a long-term contract. Such sales represent approximately 19.4% of its consolidated revenue in 2011.

The Company owns a natural gas gathering system in the Woodford Shale play in the Arkoma Basin of southeast Oklahoma. The liquids-rich natural gas gathered in the Woodfo! rd system is processed through Centrahoma Processing LLC (Centrahoma), its equity investment, or othe r third-party processors. In addition, it owns the Foss Lake! natural gas gathering system and the Western Oklahoma natural gas processing complex, all located in Roger Mills, Beckham, Custer and Ellis Counties of western Oklahoma. The gathering portion consists of a pipeline system that is connected to natural gas wells and associated compression facilities. The Company also owns a gathering system in the Granite Wash formation in Wheeler County in the Texas panhandle that is connected to its Western Oklahoma processing complex. The Company completed the expansion of the Western Oklahoma natural gas processing plant in October 2011.

Approximately 70% of its Oklahoma volumes result from contracts with three producers in 2011. The Company sells substantially all of the NGLs produced in the Western Oklahoma processing complex to ONEOK Hydrocarbon L.P. (ONEOK) under a long-term contract. Such sales represent approximately 13.2% of its consolidated revenue in 2011. The Company owns a number of natural gas gathering systems lo cated in Texas, Louisiana, Mississippi and New Mexico, including the Appleby gathering system in Nacogdoches County, Texas. It gathers a portion of the gas produced from fields adjacent to its gathering systems, including from wells targeting the Haynesville Shale. In addition, it owns four lateral pipelines in Texas and New Mexico.

Northeast Segment

The Company's Northeast segment assets include the Kenova, Boldman, Cobb, Kermit and Langley natural gas processing plants, an NGL pipeline and the Siloam NGL fractionation plant. In addition, it has two caverns for storing propane at its Siloam facility and additional propane storage capacity under a long-term firm-capacity agreement with a third party. The Northeast segment operations include fractionation and marketing services on behalf of the Liberty segment. The Company owns and operates ! a crude o! il pipeline in Michigan (Michigan Crude Pipeline) providing transportation service for three shippe rs.

Liberty Segment

The Company pr! ovides na! tural gas midstream services in southwestern Pennsylvania and northern West Virginia through MarkWest Liberty Midstream. It is a processor of natural gas in the Marcellus Shale, with gathering, processing, fractionation, storage and marketing operations.

Utica Segment

Effective January 1, 2012, the Company and The Energy and Minerals Group (EMG) formed MarkWest Utica EMG, a joint venture focused on the development of natural gas processing and NGL fractionation, transportation and marketing infrastructure to serve producers' drilling programs in the Utica shale in eastern Ohio. During 2011, the Utica Segment did not have any operations.

Gulf Coast Segment

The Company owns and operates the Javelina processing facility, a natural gas processing facility in Corpus Christi, Texas that treats and processes off-gas from six local refineries operated by three different refinery customers. As of December 31, 2011, the Company owned a 40% interest in Centrahoma Processing LLC (Centrahoma), a joint venture with Cardinal Midstream, LLC (Cardinal). Centrahoma owns certain processing plants in the Arkoma Basin and Cardinal operates an additional processing plant that is not owned by Centrahoma but is located adjacent to and operates in conjunction with the Centrahoma plants.

Advisors' Opinion:

• [By Callum Turcan]

  The Utica Marcellus Texas Pipeline is being constructed by another joint venture, but this time between Kinder Morgan Energy Partners and MarkWest Energy Partners (NYSE: MWE  ) . In order for NGL producers to want to use the new pipeline, they need to know someone at the end of the line will be able to buy and process their product. Kinder Morgan Energy Partners is nice enough to offer both the logistics and the processing capacity to al! low Ameri! ca's energy boom to happen. 

• [By Mike Deane]

  After the bell on Tuesday, Markwest Energy Partners LP (MWE) announced its third quarter earnings, with revenue rising substantially from last year’s third quarter.

  MWE Earnings in Brief

  -Markwest’s revenue for the quarter came in at $420.5 million, a huge gain from last year’s same quarter revenue of $280.6 million. This was still not enough to top analysts’ revenue estimates of $458.22 million
  -Even with much higher revenue, MWE still posted a loss for the quarter of $20.03 million, which was more than last year’s loss of $15.27 million.
  -The company posted an EPS loss of 17 cents, which was larger than last year’s Q3 loss of 13 cents, and far below the analysts’ estimate of 24 cents EPS profit.

  CEO Commentary

  Frank Semple, Markwest’s chairman, president and CEO, had the following comments about the quarterly results: "Our results reflect the continued success of our producers' as they rapidly develop their acreage positions in high-quality unconventional resource plays, as well as several short-term operational constraints that we have recently experienced in the Northeast. Development of the Marcellus and Utica Shales continues to provide us with significant future growth opportunities for the expansion of critical midstream infrastructure. We are committed to providing our producers with exceptional customer service and unique solutions that will support their ongoing success."

  Dividend

  Markwest made no mention of a dividend change in its earnings report, which was not a surprise, as the company just raised its quarterly dividend by 1 cent at the end of October. The quarterly dividend of 85 cents went ex-dividend on November 5 and will be paid this Thursday. Markwest has raised its dividend every quarter for the past three years.

  Stock Performance

  MWE stock was up 39 cents, or 0.52%, at Tuesday’s market clo! se. YTD, ! the company’s s

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