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MarkWest Operational Update

Zacks Equity Research

Natural gas processor and distributor, MarkWest Energy Partners LP (MWE) released an operational update in line with its strategy of increasing its foot print in unconventional Marcellus and Utica shale gas plays.

The partnership plans to increase its presence in the Northeast and currently has 21 processing and fractionation projects under construction in 8 large-scale complexes in Ohio, Pennsylvania and West Virginia. These projects are expected to increase MarkWest’s total production to more than 4 billion cubic feet (Bcf/d) and fractionation capacity to almost 300,000 barrels per day (Bbl/d) by the end of next year.

Marcellus Shale Update

The Majorsville V facility in West Virginia, with 200 million cubic feet per day (Mmcf/d) capacity, has come online supporting production from Chesapeake Energy Corp. (CHK) and Statoil ASA (STO). This increases the total processing capacity of the Majorsville complex to 670 Mmcf/d. During the first quarter of 2014, MarkWest plans to complete another plant that would add about 200 Mmcf/e to the existing capacity. The partnership intends to set up the sixth plant in 2016. These facilities should increase total capacity to over 1 billion cubic feet per day (Bcf/d).

Next month, the Majorsville complex should see the commencement of a second large-scale de-ethanizer. This should increase the pure ethane fractionation capacity twofold, to 78,000 Bbl/d. Initially, the Mariner West Pipeline would receive production, to be followed by the ATEX and Mariner East pipelines later on.

Utica Shale Update

A joint venture (:JV) between MarkWest and The Energy and Minerals group, MarkWest Utica EMG, brought online its first cryogenic processing facility at the Seneca complex. The 200 Mmcf/d Seneca I plant will be followed by two other plants of the same capacity by the end of 2013 and second quarter of 2014 respectively. By the end of 2014, the Seneca complex – the JV’s second complex in Utica shale – should reach a processing capacity of 1 Bcf/d.

The Seneca complex has several long-term, fee-based contracts under its hood and would play an important part in the rich-gas development of Rex Energy Corp., PDC Energy (PDCE), CONSOL Energy and Gulfport Energy Corp. among others.

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

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