MarkWest Energy Partners L.P.
(
MWE
) announced plans to buy a 49% interest in a joint venture from
private-equity group The Energy & Minerals Group ("EMG"). For
the purchase, MarkWest will shell out about $1.8 billion in cash
and units.
Per the deal, MarkWest will advance $1 billion in cash and issue
19.95 million unregistered Class B shares, worth $750 billion to
$850 million, to EMG. With this transaction, EMC will have a
limited voting power of 5% and face restrictions on distributing
the common shares.
MarkWest will finance the deal through a public offering of 8
million units. The company will also provide the underwriters an
option to buy up to 1.2 million of additional units.
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.
The deal, expected to be closed by the year end, will likely
hike MarkWest's distributable cash flow in 2012 and increases it by
up to 6% in the coming years.
Denver, Colorado-based MarkWest raised its 2012 distributable
cash flow outlook to $480-$540 million (from the previous guidance
of $380-$440 million) and targets to spend $900-$1.3 billion on
capital programs. The company also expects to increase its
fee-based net operating margin by up to 6% every year.
Both MarkWest and EMG are in talks to form a new collaboration
for the Utica shale field of eastern Ohio in 2012.
MarkWest Energy is a master limited partnership 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.
(
SXL
) and
ONEOK Partners, L.P.
(
OKS
). We are maintaining a long-term Neutral rating on the stock.
MARKWEST EGY PT (
MWE
): Free Stock Analysis Report
ONEOK PARTNERS (
OKS
): Free Stock Analysis Report
SUNOCO LOGISTIC (
SXL
): Free Stock Analysis Report
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