Pipeline operator MarkWest Energy Partners L.P. recently announced a public offering of 6 million common units to increase its liquidity. MarkWest Energy also plans to offer a 30-day option to the underwriters to purchase an additional 900,000 units.
The net proceeds from this offering will be utilized for capital expenditure program, general working capital and other partnership purposes.
During the second quarter of 2012, the partnership raised $427.2 million of net equity proceeds, offering 8.0 million common units. The proceeds were used partially for MarkWest’s purchase of 100% ownership interest in Keystone Midstream Services. As of June 30, 2012, MarkWest Energy had $121.7 million of cash and cash equivalents.
The partnership has been paying distribution steadily over the years. MarkWest Energy paid a dividend of 80 cents per unit in second quarter 2012, representing an increase of 1.3% sequentially and 14.3 % year over year.
Denver, Colorado-based MarkWest Energy Partners LP, a master limited partnership (MLP), 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 conducts its operations through four segments: the Southwest, the Northeast, the Gulf Coast and Liberty.
We like MarkWest’s high-quality and diverse portfolio of midstream assets, which generate stable and recurring revenues by way of long-term fee-based contracts. It is one of the ace processors of natural gas in the Northeast and is the largest gatherer of natural gas in the prolific Carthage field in East Texas. Additionally, the partnership has a number of other gas gathering and intrastate gas transmission assets in the Southwest, primarily in Texas and Oklahoma.
In 2010, MarkWest teamed up with another MLP, Sunoco Logistics Partners L.P. , to build a distribution system to transport ethane produced in the Marcellus Shale Basin (in Northeastern U.S.) to markets along the Gulf Coast.
MarkWest Energy currently holds a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.