MarkWest Energy Partners LP (MWE) agreed to buy the 49 percent of MarkWest Liberty Midstream & Resources LLC that it doesn’t own from The Energy & Minerals Group for approximately $1.8 billion in cash and units.
The price includes $1 billion in cash, according to a statement today. The 19.95 million new Class B units MarkWest will issue to Energy & Minerals are worth $750 million to $850 million, MarkWest Chief Executive Officer Frank Semple said on a conference call. They will be convertible into common units starting in July 2013.
The Liberty joint venture “has made significant capital investments” in infrastructure for petroleum liquids in the Marcellus shale formation, Semple said in the statement.
MarkWest and Energy & Minerals, a private-equity group based in Houston, plan to create a Utica Shale joint venture to develop natural-gas processing, transportation and marketing infrastructure in eastern Ohio beginning next year, with Energy & Minerals funding most of the initial expenditures, according to the statement.
MarkWest, based in Denver, increased its 2012 distributable cash flow forecast to a range of $480 million to $540 million today, after saying in November the number would be $380 million to $440 million. The partnership expects capital spending next year to be in a range of $900 million to $1.3 billion.
MarkWest said it expects the transaction to boost its fee- based net operating margin by as much as 6 percent a year.
Morgan Stanley (MS) is the financial adviser to MarkWest on the planned transaction. Citigroup Inc. provided financial advice to Energy & Minerals.
MarkWest units fell 3.4 percent to $54.20 after the close of trading in New York.
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