MarkWest & Gulfport in Service Deal - Analyst Blog
June 08 2012 - 10:00AM
Zacks
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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