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Colorado-based upstream company Antero Resources Corporation (AR - Free Report) announced that its subsidiary Antero Midstream Partners (AM - Free Report) has entered into a joint venture with MarkWest Energy Partners L.P, a subsidiary of MPLX LP (MPLX - Free Report) . The move aims at developing and expanding the Marcellus Shale acreage in West Virginia held by Antero Resources. The joint venture will be equally owned by Antero Midstream and MarkWest Partners.
Objective
This JV seeks to capitalize on the relationship between Antero and MarkWest, which in turn will enhance the future growth possibilities of MPLX. The deal will enable Antero to diversify its midstream value chain. In addition, the JV will boost Antero Resources’ natural gas liquids production and MarkWest is likely to benefit from the enhanced acreage and lowered capital burden.
Details of the Deal
The joint venture will expand the infrastructure of Sherwood Complex and thus, the three plants that are set to be developed at the complex will increase Antero Resources' capacity by 600 million square feet per day. The first two facilities are scheduled to begin operations in the first and the third quarter of this year, while the third facility is likely start functioning from the first quarter of next year. Further, eight processing facilities to support Antero Resources are to be developed at Sherwood and a new location at West Virginia.
Under the agreement, Antero Midstream will release 195,000 gross acres processing services to the JV held by Antero Resources in Ritchie, Tyler, and Wetzel Counties. This would boost MarkWest’s Marcellus Shale acreage to more than 360,000 acres. MarkWest will set up three processing plants at Sherwood Complex and upgrade the infrastructure for their operation. Antero Midstream will initially contribute $155 million for the processing assets at Sherwood and fractionation capacity at Hopedale Complex. Eventually both the companies will contribute equally to the JV.
Revised Guidance
Post the announcement of the joint venture, Antero Resources has revised its capital expenditure to $800 million from the earlier figure of $525 million, representing an increase of 52%. It has also increased its net income forecasts by 3%. Forecasted distributed coverage ratio has also been raised by 4%.
Zacks Rank & Key Pick
Antero Resources, headquartered in Denver, deals with the acquisition, production and exploration of oil and natural gas with its assets chiefly located in Appalachian Basin in West Virginia, Ohio and Pennsylvania. The company currently carries a Zacks Rank #3 (Hold).
Over the last one month, the Zacks categorized U.S Oil and Gas Production & Exploration industry has registered a negative growth of 4% growth. However, shares of Antero Resources have outperformed the industry by registering a positive growth rate of around 3%.
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Antero Midstream Enters into a JV with MPLX Unit
Colorado-based upstream company Antero Resources Corporation (AR - Free Report) announced that its subsidiary Antero Midstream Partners (AM - Free Report) has entered into a joint venture with MarkWest Energy Partners L.P, a subsidiary of MPLX LP (MPLX - Free Report) . The move aims at developing and expanding the Marcellus Shale acreage in West Virginia held by Antero Resources. The joint venture will be equally owned by Antero Midstream and MarkWest Partners.
Objective
This JV seeks to capitalize on the relationship between Antero and MarkWest, which in turn will enhance the future growth possibilities of MPLX. The deal will enable Antero to diversify its midstream value chain. In addition, the JV will boost Antero Resources’ natural gas liquids production and MarkWest is likely to benefit from the enhanced acreage and lowered capital burden.
Details of the Deal
The joint venture will expand the infrastructure of Sherwood Complex and thus, the three plants that are set to be developed at the complex will increase Antero Resources' capacity by 600 million square feet per day. The first two facilities are scheduled to begin operations in the first and the third quarter of this year, while the third facility is likely start functioning from the first quarter of next year. Further, eight processing facilities to support Antero Resources are to be developed at Sherwood and a new location at West Virginia.
Under the agreement, Antero Midstream will release 195,000 gross acres processing services to the JV held by Antero Resources in Ritchie, Tyler, and Wetzel Counties. This would boost MarkWest’s Marcellus Shale acreage to more than 360,000 acres. MarkWest will set up three processing plants at Sherwood Complex and upgrade the infrastructure for their operation. Antero Midstream will initially contribute $155 million for the processing assets at Sherwood and fractionation capacity at Hopedale Complex. Eventually both the companies will contribute equally to the JV.
Revised Guidance
Post the announcement of the joint venture, Antero Resources has revised its capital expenditure to $800 million from the earlier figure of $525 million, representing an increase of 52%. It has also increased its net income forecasts by 3%. Forecasted distributed coverage ratio has also been raised by 4%.
Zacks Rank & Key Pick
Antero Resources, headquartered in Denver, deals with the acquisition, production and exploration of oil and natural gas with its assets chiefly located in Appalachian Basin in West Virginia, Ohio and Pennsylvania. The company currently carries a Zacks Rank #3 (Hold).
Over the last one month, the Zacks categorized U.S Oil and Gas Production & Exploration industry has registered a negative growth of 4% growth. However, shares of Antero Resources have outperformed the industry by registering a positive growth rate of around 3%.
Denbury Resources Inc is one of the better-ranked players in the industry carrying a Zacks Rank #1 (Strong Buy). DNR is expected to report year-over-year earnings growth of 450% in 2017. You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017? Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>