MarkWest & Gulfport in Service Deal - Analyst Blog


The joint venture of Denver, Colorado-based MarkWest Energy Partners, L.P. ( MWE ) and private-equity group The Energy & Minerals Group ("EMG") - MarkWest Utica EMG, L.L.C. aka MarkWest Utica - has entered into a definite service agreement with Gulfport Energy Corporation ( GPOR ). The companies had signed the deal's Letter of Intent (LOI) in early March.

Per the deal, MarkWest Utica will extend gathering, processing, fractionation and marketing services to Gulfport for the development of the liquids-rich corridor of the Utica. It also includes the setting up of extensive natural gas gathering infrastructure across Harrison, Guernsey, and Belmont counties. These facilities are expected to be operational this year.

MarkWest Utica plans to process gas at its Harrison County processing complex and render natural gas liquid (NGL) fractionation and marketing services at the Harrison County fractionator. The NGL purity products will be marketed by truck, rail and pipeline from this unit that will be developed through three phases and will come fully online in 2013.

The joint venture will likely have about 60 miles of gas gathering pipelines and associated compression to transport the Gulfport volumes by the end of 2012. The gathering pipelines capacity will be expanded up to 140 miles by the first quarter of 2014.

Additionally, MarkWest Utica will build a second processing complex in Noble County. This facility will be developed in two steps and is slated to be completed in mid-2013.

Both Harrison and Noble processing complexes will be linked to the Harrison fractionation complex that will again be connected with the Houston fractionation plant.

The Harrison facility along with the Houston unit will form the biggest fractionation complexes in the northeast that will offer high-class operating flexibility and consistency, as well as market access. 

MarkWest management remains optimistic about this collaboration and expects to generate with high returns from the resource-rich holdings in the southern Utica shale.

We remain bullish on MarkWest's performance in the coming quarters based on its strong position in the midstream business, achieved through a combination of organic efforts and accretive acquisitions. We view MarkWest units as an attractive investment and maintain our long-term Outperform recommendation on the stock.

GULFPORT ENGY (GPOR): Free Stock Analysis Report
MARKWEST EGY PT (MWE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: GPOR , MWE , NGL

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