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Antero Midstream Announces Joint Venture with MPLX

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Antero Midstream Announces Joint Venture with MPLX PART 1 OF 5

Antero Midstream Announces Joint Venture to Diversify Business

Joint venture

Antero Midstream Partners (AM) and MarkWest Energy Partners, the wholly owned subsidiary of MLPX LP (MPLX), have decided to form a 50-50 JV (joint venture) to pursue processing and fractionation expansion opportunities in the liquid-rich Marcellus region. AM, which is involved mainly in gathering, compression, and the fresh water delivery business, will diversify its midstream value chain through the JV. MLPX, on the other hand, will benefit from increased acreage and reduced capital burden.

Antero Midstream Announces Joint Venture to Diversify Business

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Midstream companies Sunoco Logistics Partners (SXL), Crestwood Equity Partners (CEQP), and Kinder Morgan (KMI) have formed similar JVs in the recent months. However, the main rationale behind these JVs had been lowering capital burden and improving balance sheets.

Deal terms

Under the JV, Antero Midstream will “release to the Joint Venture its right to provide processing services on 195,000 gross acres held by Antero Resources in Ritchie, Tyler, and Wetzel Counties in West Virginia,” according to an Antero press release. MarkWest Energy Partners will contribute its three new processing plants at the Sherwood processing facility and fractionation capacity at the Hopedale complex to the JV. The press release also stated that “the Joint Venture will own a 33 1/3% interest in the recently commissioned third fractionator at the Hopedale complex.” MarkWest Energy will continue to operate the JV assets.

The assets are backed by long-term fee-based contracts with Antero Resources (AR). We’ll look at the expansion plans in the next article.

Management commentary

According to Antero CEO Paul Rady, “the accretive Joint Venture represents a big step towards executing Antero Midstream’s full value chain organic growth strategy supporting Antero Resources.” He added that “the joint venture capitalizes on the strong relationship between Antero and MarkWest, and now MPLX, and the long track record and deep expertise in developing processing and fractionation assets, particularly in the Northeast. This premier partnership will economically align a dominant resource and infrastructure footprint unparalleled in Appalachia.”

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