MarkWest, Summit reach deal

DENVER – MarkWest Energy Partners will sell its natural gas gathering assets in Doddridge County to Summit Midstream Partners for $210 million cash, the companies announced on Wednesday.

Rich-gas gathered by these assets is dedicated to MarkWest for processing at the Sherwood complex in Doddridge County. The transaction is expected to close this month, MarkWest said.

“Summit is a high quality midstream operator and we are pleased to announce the sale of our rich gas gathering system in Doddridge County,” said Frank Semple, chairman, president and chief executive officer of MarkWest. “This transaction provides MarkWest with ongoing financial flexibility to support our large set of processing, fractionation and NGL transportation projects that are currently being developed in the Marcellus and Utica Shales.”

The acquisition is Summit’s initial entry into the Marcellus Shale, one of the largest, most active and prolific basins in North America, said Steve Newby, president and chief executive officer of Summit.

“We are excited about establishing a footprint in this world-class basin and beginning a strategic relationship with MarkWest,” he said. “We look forward to working with MarkWest on this and future opportunities to expand this relationship and complement its industry leading position in the Marcellus and Utica.”

Included in the sale is more than 40 miles of new high-pressure gas gathering pipelines, rights-of-way associated with the pipeline and two compressor stations with more than 21,000 horsepower of combined compression, MarkWest said.

The rich-gas gathering and compression system is supported by a long-term, fee-based contract with an affiliate of Antero Resources Corp., anchor producer at MarkWest’s Sherwood processing complex. Antero is a leading Marcellus Shale producer with 312,000 net acres in the southwestern core of the shale play.

In northern West Virginia, Antero has 14 drilling rigs in operation and has access to 400 million cubic feet per day of fully dedicated cryogenic processing capacity at the Sherwood complex. To support Antero’s rapidly growing rich-gas production, MarkWest expects to install two additional plants at the Sherwood complex by mid-2014, bringing processing capacity to 800 MMcf/d, the company said.

Summit’s acquisition of premier gathering infrastructure from MarkWest will further enhance its presence as a leading growth-oriented midstream energy company focused on developing, owning and operating strategically located assets in North America’s growing unconventional resource basins. The transaction represents Summit’s entry into the largest producing shale play in the U.S. and a highly prospective growth opportunity, supported by significant rich-gas production from Antero and potential future producers.

This acquisition further enhances Summit’s scale to execute its growth strategy and provides greater geographic and customer diversification.

The proceeds from this transaction will provide MarkWest with additional financial flexibility to fund growth capital investments associated with more than 18 previously announced major midstream infrastructure projects primarily in the Marcellus and Utica Shales. By the end of 2014, MarkWest is expected to have over 4 billion cubic feet per day of processing capacity and 275,000 barrels per day of fractionation capacity in the heart of two of America’s most prolific shale plays.

Jefferies LLC acted as MarkWest’s exclusive financial advisor and Barclays Capital, Inc. acted as Summit’s exclusive financial advisor in connection with this transaction.

MarkWest Energy Partners is engaged in the gathering, processing and transportation of natural gas, the gathering, transportation, fractionation, storage and marketing of natural gas liquids and the gathering and transportation of crude oil.

Summit Midstream Partners is focused on owning and operating midstream energy infrastructure assets that are strategically located in the core producing areas of unconventional resource basins, primarily shale formations, in North America.