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Pipeline operator MarkWest Energy Partners L.P. (MWE - Analyst Report) raised its third quarter 2011 cash distribution by 4.3% sequentially and 14.1% year over year to 73 cents per unit ($2.92 per unit annualized).

Cash distribution is up 192% since its initial public offering (IPO) in 2002. MarkWest’s new distribution is payable on November 14 to unitholders of record as on November 7, 2011.

Denver, Colorado-based MarkWest Energy is engaged in the gathering, processing and transmission of natural gas, transportation, fractionation and storage of natural gas liquids (NGLs), and the gathering and transportation of crude oil.

The proposed hike in payout at MarkWest is in sync with its proven history of distribution growth. MarkWest, which is slated to report its third-quarter results on November 7, has bolstered its cash flows recently on the back of benefits from acquired assets and growth projects, significantly expanding its presence in liquids-rich resource plays.

MarkWest units currently retain a Zacks #2 Rank, which translates into a short-term Buy rating.

MarkWest owns a high-quality and diverse portfolio of midstream assets that generate stable and recurring revenues based on long-term fee-based contracts. Over the last few years, the partnership has consolidated its position in the midstream business, achieved through a combination of organic efforts and accretive acquisitions.

With its proven track record of supporting producers in the development of shale plays, MarkWest is in a great position to participate in the development of infrastructure required for the development of leasehold assets.

Last year, MarkWest teamed up with another MLP, Sunoco Logistics Partners L.P. (SXL - Analyst Report), to build a distribution system to transport ethane produced in the Marcellus Shale Basin (in north eastern U.S.) to markets along the Gulf Coast. We believe that the initiative, known as the ‘Mariner Project,’ offers several benefits.

Not only will the project help MarkWest to profit from the direct opportunity of capturing demand for ethane takeaway capacity at Marcellus, but it will also support higher gathering system volumes and higher ethane production.

We also appreciate MarkWest’s steady improvement in its liquidity/cash flow position and its track record of consistent distribution growth. Furthermore, with nearly 200% distribution growth since the IPO in May 2002, we are confident of the partnership’s total return potential.

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