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MarkWest Utica EMG – a joint venture between pipeline operator MarkWest Energy Partners LP (MWE - Analyst Report) and energy infrastructure private equity fund The Energy and Minerals Group – has entered into a deal with PDC Energy Inc. (PDCE - Snapshot Report) – an independent energy firm.   

Per the agreement, MarkWest will purvey gathering, processing, fractionation and marketing services in Utica Shale region for PDC Energy. Utica Shale is basically a rock unit and has a huge potential of becoming a natural gas resource. Utica Shale underlies parts of Kentucky, Maryland, New York, Ohio, Pennsylvania, Tennessee, West Virginia and Virginia in the U.S.

By the end of the second quarter of 2013, MarkWest is expected to start gathering and processing of PDC Energy’s liquids-rich gas that will be produced from Guernsey County, Ohio. The initial production from PDC Energy’s operation in the Utica Shale is planned to be processed at Cadiz complex of MarkWest, situated in Harrison County, Ohio.  

PDC Energy’s gas will then be carried to the Seneca complex for further processing, by the second half of 2013. The Seneca complex is based in the Noble County, Ohio.

Along with developing high-grade processing and gathering infrastructure for PDC Energy, MarkWest also plans to finish the installation of fractionation facility in Harrison County, Ohio, by the first quarter of 2014. The facility is expected to have a fractionation capacity of 100,000 barrels of liquid per day.

Denver, Colorado-based MarkWest Energy is a master limited partnership (MLP). The firm 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. MarkWest Energy Partners conducts its operations in four segments: Southwest, Northeast, Liberty and Utica.

Acquisitions have historically played a major role in the partnership’s growth profile and are expected to remain significant. MarkWest Energy may find it difficult to complete accretive transactions in the future, which could negatively impact its growth rate.

MarkWest Energy currently carries a Zacks Rank #5 (Strong Sell), implying that it is expected to significantly underperform the broader U.S. equity market over the next one to three months.    

In the energy sector, Helmerich & Payne Inc (HP - Analyst Report) and Range Resources Corporation (RRC - Analyst Report) display better fundamentals and currently carry a Zacks Rank #1 (Strong Buy).

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