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MarkWest Energy Fell as Marathon Increased Its Cash Consideration

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Top losers

Southcross Energy Partners (SXE) was the top loser among midstream MLPs at the end of trading on Tuesday, November 17. It fell 6.7% yesterday.

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Southcross Energy Partners

Southcross Energy Partners has returned -68.6% YTD (year-to-date). Its poor YTD market performance is due to its significant exposure to natural gas and NGL (natural gas liquid) prices. The partnership mainly provides natural gas gathering, processing, treating, compression, and transportation services. Apart from this, Southcross Energy Partners is also engaged in natural gas and NGL acquisitions and marketing.

VTTI Energy Partners

VTTI Energy Partners (VTTI) is next on our list of the top five midstream MLP losers on November 17. It fell 4.3% yesterday. It returned -22.8% YTD. The partnership mainly provides crude oil and refined products terminaling services.

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Other losers

MarkWest Energy Partners (MWE), Crestwood Equity Partners (CEQP), and Midcoast Energy Partners (MEP) were among the top five midstream MLP losers on Tuesday, November 17. They fell 3.7%, 3.5%, and 3.1% in the last trading session, respectively.

On November 17, MarkWest Energy Partners fell after an announcement by Marathon Petroleum (MPC). It plans to increase its cash consideration for the MPLX-MarkWest Energy merger. This is the second cash consideration increase since the deal announcement.

Marathon Petroleum increased the one-time cash payment to $1.3 billion. Under the new terms, each MarkWest Energy unitholder would receive 1.1 MPLX common units plus a one-time cash payment of ~$6.20 per MarkWest Energy common unit—up from the cash consideration announced on November 10 of ~$5.21 per unit.

According to the press release “Three of MarkWest’s top unitholders, representing more than 15 percent of voting units, have agreed to vote in favor of the transaction.” The shareholder vote by MarkWest common unitholders is on December 1, 2015.

The Alerian MLP ETF (AMLP) includes 23 midstream MLPs. It fell 1.7% yesterday. MarkWest Energy accounts for 6.7% of AMLP. For context, the upstream energy company heavy SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 1.9% on the same day.

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