MarkWest Energy Partners: A Background Look
A Deeper Dive into the MarkWest-MPLX Merger
MarkWest, an MLP
MarkWest Energy Partners (MWE) is an MLP that owns and operates midstream services–related businesses. MarkWest has exposure to many natural gas resource plays, including the Marcellus Shale, the Utica Shale, the Huron/Berea Shale, the Haynesville Shale, the Woodford Shale, and Granite Wash.
MarkWest’s integrated midstream energy asset network links producers of natural gas, NGLs (natural gas liquids), and crude oil from some of the largest supply basins in the United States to domestic and international markets. MarkWest’s midstream energy operations include natural gas gathering, processing, and transportation; NGL gathering, transportation, fractionation, storage, and marketing; and crude oil gathering and transportation.
MarkWest’s capacity includes approximately 5,800 MMcf/d (million cubic feet per day) of natural gas processing, 379,000 bbl/d (barrels per day) of NGL fractionation, and more than 4,000 miles of pipelines.
MarkWest is being bought by MPLX (MPLX), a limited partnership sponsored by Marathon Petroleum Corporation (MPC).
MarkWest is divided into four operating segments based on shale geography. They include the Southwest Segment, the Northeast Segment, the Marcellus Segment, and the Utica Segment. The Southwest Segment accounts for just under half of the company’s revenues and about a third of operating income.The Marcellus Segment accounts for about 36% of revenues and 53% of operating income.
MarkWest is expanding its Marcellus, Utica, and Southwest segments. MarkWest has a diversified customer base and is not overly reliant on any one significant customer.
Other merger arbitrage resources
Other important merger spreads include the deal between Baker Hughes (BHI) and Halliburton (HAL). For the basics on risk arbitrage investing, please refer to Merger arbitrage must-knows: A key guide for investors.
Investors who would like diversified exposure to the financial sector should look at the S&P SPDR Energy ETF (XLE).
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