Shale Daily / NGI All News Access

EMG Finalizes Increased Stake in Utica Midstream Venture

Appalachian midstream provider MarkWest Energy Partners LP and private equity fund The Energy and Minerals Group (EMG) have completed an amendment to give EMG a larger stake in their joint venture (JV) in the Utica Shale.

Under the terms of amended and restated limited liability company agreement, EMG will increase its initial capital investment in the JV -- officially known as MarkWest Utica EMG LLC -- from $500 million to $950 million (see Shale Daily, Feb. 7).

MarkWest and EMG are developing an integrated system that includes low- and high-pressure gas gathering systems, natural gas liquids pipelines and two large-scale processing complexes that would have nearly 800 MMcf/d of processing capacity (see Shale Daily, Jan. 5, 2012).

"The additional contributions from EMG provide MarkWest with significant financial flexibility in the timing of its capital contributions to the Utica JV," Denver-based MarkWest said in a statement Thursday. "The amended LLC agreement does not modify the ownership interest levels or quarterly distribution percentages as originally set forth between the parties.

"In addition, MarkWest expects to receive a distribution from the Utica JV substantially equivalent to its short-term contribution by the end of February 2013."

MarkWest added that in the last three months it raised $1.5 billion in net proceeds from debt and equity transactions, and is currently undrawn on $1.2 billion in credit, giving it the ability to issue common units under its $600 million continuous equity program.

"These transactions, coupled with the execution of the amended LLC agreement, provide MarkWest with significant liquidity to fund the majority of its 2013 capital plan," the company said.

MarkWest CEO Frank Semple lauded the amended agreement. "The success of our Utica Shale JV is a direct result of the outstanding drilling results by our producer customers and the execution of our full-service midstream business model in this rapidly developing resource play," he said. "Clearly, we believe that the Utica JV with EMG is creating significant long-term value for our customers and our investors."

The new integrated system to be developed under the JV will support development plans of producers that include Antero Resources, Gulfport Energy Corp. and Rex Energy. The facilities, expected to be completed in early 2014, would represent the largest fractionation and marketing complex in the Utica Shale, providing 100,000 b/d of C2+ fractionation capacity, the partners said.

Last week, the JV clinched an agreement with Rex for gathering and processing the liquids-rich gas by June (see Shale Daily, Feb. 20). Rex has completed three wells on its 4,100 net acres in the Utica, but has been forced to shut them in due to a lack of infrastructure.

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