MarkWest plans $1.8B buyout of Marcellus JV

Posted December 13, 2011

Pittsburgh Business Times
by Paul J. Gough

MarkWest Energy (NYSE: MWE) will spend $1.8 billion to buy the remaining 49 percent of its joint venture in the Marcellus Shale.

MarkWest will purchase the Energy & Minerals Group's share of the companies' MarkWest Liberty Midstream & Resources LLC joint venture in the Marcellus Shale that includes southwestern Pennsylvania acreage, the companies said.

The deal includes $1 billion in cash and 19.95 million in class B shares that will be issued to EMG, a private equity firm based in Houston and Dallas.

"Our Liberty joint venture with EMG has made significant capital investments to develop world-class midstream infrastructure that has been critical to the development of the liquids-rich area of the Marcellus," said Frank Semple, chairman, president and CEO of MarkWest, in a prepared statement. MarkWest has a huge operation in Houston, Pa., among other places.

At the same time, EMG and MarkWest Energy will start a midstream joint venture in the Utica Shale, which is located in Ohio and a part of western Pennsylvania, and is deeper and possibly even more lucrative than the Marcellus Shale.

The EMG/MarkWest joint venture will be centered in eastern Ohio and begin sometime in 2012, with much of the initial capital funds coming from EMG. Further details will be announced in January, the companies said.

"We are very pleased to work closely with EMG in a new joint venture to leverage a similar operational and financial platform to develop integrated NGL transportation, fractionation, storage and marketing services in the liquids-rich corridor of the Utica Shale," Semple said.