MarkWest Starts Majorsville Project - Analyst Blog

MarkWest Liberty Midstream & Resources L.L.C and NiSource Midstream Services (‘NMS”) announced the start-up of operations for projects in the Majorsville Processing complex in West Virginia. MarkWest Liberty Midstream & Resources is a joint venture of MarkWest Energy Partners L.P. (MWE) and The Energy & Minerals Group, while NiSource Midstream Services is a unit of NiSource Gas Transmission & Storage (“NGT&S”).
 
First of its type, Majorsville complex is an integrated gathering and processing system aimed to increase Marcellus production in northern West Virginia. MarkWest Liberty and its partner have joined hands to mutually develop natural gas gathering, processing and transmission projects in this complex.
 
The gathering and processing facilities of the project are already under contract and will serve various producers, including subsidiaries of Chesapeake Energy Corporation (CHK), CONSOL Energy Inc. (CNX), Range Resources Corporation (RRC) and Statoil ASA (STO).
 
In early September, 2010, MarkWest Liberty started operations at a cryogenic natural gas processing plant in the Majorsville complex, with a capacity of 120 million cubic feet per day (MMcf/d). A 35-mile natural gas liquids (NGL) pipeline connecting the Majorsville complex to MarkWest Liberty's midstream complex in Houston, Pennsylvania, was also put to action.
 
MarkWest Liberty targets to expand its cryogenic processing capacity at the Majorsville complex to 270 MMcf/d along with the expansion of Houston cryogenic processing capacity to 355 MMcf/d from 155 MMcf/d in 2011.
 
With an increased NGL production and greater fractionation facility, MarkWest will have an infrastructure of nearly 85,000 barrels per day of fractionation, storage and marketing capacity in the Marcellus and Appalachian basin.
 
MarkWest management remains highly optimistic regarding the future of this project and will continue with their investments for the development of the Marcellus shale.
 
Colorado-based MarkWest Energy Partners exhibits a high-quality and diverse portfolio of midstream assets capable of generating stable and recurring revenues through long-term fee-based contracts. The partnership is also expected to benefit from the accelerating demand for NGLs, an active hedging policy and a steady improvement in its financial health. Hence, we retain our long-term Outperform recommendation for the stock.
 
However, we currently have a Zacks #3 Rank (Hold rating) on the stock, implying that we expect the partnership to perform in line with the broader equity market over the next one-to-three months.

 
CHESAPEAKE ENGY (CHK): Free Stock Analysis Report
 
CONSOL ENERGY (CNX): Free Stock Analysis Report
 
MARKWEST EGY PT (MWE): Free Stock Analysis Report
 
RANGE RESOURCES (RRC): Free Stock Analysis Report
 
STATOIL ASA-ADR (STO): Free Stock Analysis Report
 
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