MarkWest to Sell Marcellus Shale Assets


Natural gas processor and distributor, MarkWest Energy Partners LP (MWE) announced the sale of some pipelines and natural gas gathering assets in Doddridge County, W.Va. to Dallas, Texas-based Summit Midstream Partners LP (SMLP).

The assets include over 40 miles of recently constructed high-pressure gas gathering pipelines, certain rights-of-way related with the pipeline and two compressor stations totaling above 21,000 horsepower of combined compression. The transaction is likely to close this month.

The gas gathered by the system will be processed at MarkWest’s Sherwood processing complex in Doddridge County. The rich-gas gathering and compression system will gather gas produced by an associate of Antero Resources Corporation under a long-term, fee-based agreement. Antero is an anchor producer at MarkWest’s Sherwood processing complex. To support Antero’s rising rich-gas production, MarkWest plans to set up two extra plants at the Sherwood complex by mid-2014.

Summit Midstream will shell out $210 million for the above transaction. These proceeds will enhance MarkWest’s financial flexibility to finance its midstream infrastructure projects mainly in the Marcellus and Utica shales. MarkWest expects to have more than 4 billion cubic feet per day of processing capacity and 275,000 barrels per day of fractionation capacity in both these shale plays by the end of 2014.

Last month, in order to assist the fast increasing drilling operations in the southern part of the Utica Shale, MarkWest Utica EMG L.L.C. further expanded its midstream operations. MarkWest Utica EMG L.L.C. is a joint venture between MarkWest and The Energy and Minerals Group. The plan included building of the third cryogenic gas processing plant, which is expected to process cryogenic gas at a rate of 200 million cubic feet per day.

MarkWest currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at other energy production/pipeline entities like Enbridge Energy Management LLC (EEQ) and Enterprise Products Partners LP (EPD) as attractive investments. Both these firms sport a Zacks Rank #2 (Buy).

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