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Marathon Petroleum Benefits from the MPLX-MarkWest Merger

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Integration opportunities

In the last part of this series, we looked at MarkWest Energy Partners’ (MWE) assets. In this part, we’ll see how the assets from MarkWest Energy, Marathon Petroleum (MPC), and the potential partnership create integration opportunities for the combined MPLX LP (MPLX) and its sponsor—Marathon Petroleum.

According to the merger investor presentation, the combination provides “significant synergies and critical mass to deliver NGLs and refined products to East Coast markets.” Also, “The combination provides significant vertical integration opportunities between MWE and MPC/MPLX.” Phillips 66 Partners (PSXP), Buckeye Partners (BPL), and Shell Midstream Partners (SHLX) are among the midstream MLPs that operate in the East Coast region. Together, MarkWest Energy, Buckeye Partners, and Shell Midstream Partners account for ~15.24% of the Alerian MLP ETF (AMLP).

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According to the recent press release, “The combined entity would further MarkWest’s leading midstream presence in the Marcellus and Utica shales by allowing it to pursue additional dynamic midstream projects. These large­scale strategic projects will allow producer customers to achieve the highest value for their growing production in these important shale regions. In addition, the combination provides significant vertical integration opportunities, as MPC is a large consumer of natural gas liquids.”

Management insights

According to Frank Semple, CEO of MarkWest Energy Partners, “This powerful combination provides MarkWest with an investment grade balance sheet and a significant expansion of growth projects driven by MPC’s significant pipeline and refinery operations in the upper Midwest and the Gulf Coast. Our best­in­class midstream platform will provide the combined company with an extraordinary portfolio of integrated services and long-term growth opportunities.”

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