Natural gas processor and distributor, MarkWest Energy Partners LP (MWE) has expanded its presence in the Texas Panhandle and Western Oklahoma through the completion of a cryogenic gas processing plant and a high pressure trunk line at Granite Wash. The Buffalo Creek plant has a capacity of 200 million cubic feet per day (MMcf/d).
The Buffalo Creek facility has long-term contracts with Chesapeake Energy Corp. (CHK) and the latter has provided MarkWest Energy about 130,000 acres in the Anadarko Basin. With Western Oklahoma’s Arapahoe processing complex and this new addition, MarkWest Energy currently has a processing capacity of 435 MMcf/d in the Anadarko Basin. These two facilities are connected via the partnership’s 575 MMcf/d gathering system.
MarkWest Energy expects volume expansion at this new facility as Chesapeake continues its drilling ventures and development of its Granite Wash properties.
Denver, Colorado-based MarkWest Energy is a master limited partnership that is engaged in the gathering, processing and transmission of natural gas, transportation, fractionation and storage of natural gas liquids and the gathering and transportation of crude oil.
We continue to like MarkWest Energy for its high-quality and diverse portfolio of midstream assets, proven track record of supporting producers in the growth of shale plays and its steady improvement in liquidity/cash flow position. However, we find the current valuation fair and adequately reflecting the partnership’s growth prospects.
Earlier, the partnership had reported disappointing third-quarter results of 10 cents which missed the Zacks Consensus Estimate of 25 cents. We expect this negativity to continue when the partnership reports its earnings on Feb 26.
MarkWest Energy currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider other players from the same industry such as Energy Transfer Equity, L.P. (ETE) and Spectra Energy Partners, LP (SEP). Both these stocks has a Zacks Rank #2 (Buy).
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