MarkWest Energy Partners, L.P. (MarkWest) (NYSE: MWE) and The Energy & Minerals Group (EMG) announced today that as a result of their continued success in developing a world-class midstream system in the Utica Shale, the parties have executed a term sheet, which increases EMG’s initial capital contribution in MarkWest Utica EMG, LLC (Utica Joint Venture) by up to $450 million, bringing their total initial contribution to up to $950 million. The transaction allows EMG to increase its contribution in one of the fastest-growing and highly- prospective shale plays in the United States and provides MarkWest with significant additional financial flexibility in the timing of its capital contributions to the Utica Joint Venture. The transaction does not modify the ownership interest levels or quarterly distribution percentages as set forth in the existing Limited Liability Company Agreement (L.L.C. Agreement) between the parties.
MarkWest and EMG also executed an amendment to the L.L.C. Agreement that provides for MarkWest to contribute up to $150 million to the Utica Joint Venture on a short-term basis. EMG is expected to provide additional funding by the end of February and in no instance any later than the end of the first quarter of 2013 at which point in time, MarkWest will receive a distribution substantially equivalent to its short-term contribution to the Utica Joint Venture. MarkWest anticipates utilizing a portion of its available liquidity resulting from its recently completed capital market transactions for the interim funding.
The Utica Joint Venture is currently developing a fully-integrated midstream system to support rapidly expanding development plans of producers including Antero Resources, Gulfport Energy Corporation and Rex Energy. The system includes extensive low- and high-pressure gas gathering systems, natural gas liquids (NGL) pipelines, and two large-scale processing complexes that will have nearly 800 million cubic feet per day (MMcf/d) of processing capacity. The two processing complexes will be connected by a high-pressure rich-gas pipeline header that will provide enormous flexibility and redundancy for producer customers operating in the core liquids-rich area of the Utica Shale. MarkWest Utica will construct an NGL gathering line between its processing complexes and on to the Hopedale fractionation and marketing complex located in Harrison County, Ohio. The Cadiz processing complex will include a de-ethanization facility where purity ethane will be produced and delivered into the ATEX ethane pipeline. The propane and heavier natural gas liquids will then flow via pipeline to the Hopedale fractionator for further separation into valuable purity products. Together these facilities will represent the largest fractionation and marketing complex in the Utica Shale, providing 100,000 barrels per day (Bbl/d) of C2+ fractionation capacity with an expected completion date of first quarter 2014. The Hopedale facility will also be connected by pipeline to MarkWest’s extensive NGL infrastructure in the Marcellus Shale and to its Houston, Pennsylvania complex, the largest fractionation and marketing facility in the Northeast.
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