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MarkWest Closes JV Buy

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Denver, Colorado-based MarkWest Energy Partners, L.P. completed the acquisition of a 49% interest in a joint venture from private-equity group The Energy & Minerals Group (“EMG”). For the purchase, MarkWest shelled out about $1.0 billion in cash and issued 19.95 million unregistered MWE Class B Units to EMG.

According to the master limited partnership––MarkWest, this acquisition will be immediately accretive in 2012, on a discounted cash flow per unit basis and will be 6% accretive in 2013 and beyond.

The joint venture, named MarkWest Liberty Midstream & Resources LLC, was formed three years ago and operates in the Marcellus Shale formation. The venture provides natural gas midstream services to support producers in western Pennsylvania and West Virginia.

We believe this purchase will endow MarkWest with a firm footing on the Marcellus Shale play that holds a lot of resource potential.

MarkWest and EMG are also in talks to form a new collaboration for the Utica Shale field of eastern Ohio in 2012. This joint venture will be involved in developing significant natural gas processing and NGL fractionation, transportation, and marketing infrastructure in region. In the initial phase, EMC will finance the majority of capital expenditures necessary to develop the Utica midstream infrastructure.

In a separate announcement, Markwest increased its senior secured revolving credit facility by $150 million. This has resulted in raising the total borrowing capacity to $900 million. This move will render additional financial flexibility to the partnership, enabling it to carry on its growth initiatives.

MarkWest Energy is engaged in the gathering, processing and transmission of natural gas, transportation, fractionation and storage of natural gas liquids as well as the gathering and transportation of crude oil.

MarkWest competes with other industry players such as Sunoco Logistics Partners L.P. and ONEOK Partners, L.P. . We are maintaining a long-term Neutral rating on the stock.

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