Midstream venture will support Antero Resources production
MPLX LP (ticker: MPLX) announced a joint venture with Antero Midstream (ticker: AM) on Monday, in a venture to support development of acreage owned by Antero Resources (ticker: AR). MarkWest Energy Partners, a subsidiary of MPLX, and Antero Midstream will own the joint venture in a 50-50 split.
As part of this agreement, Antero Midstream has agreed to release to the joint venture its 195,000-gross acre processing dedication from Antero Resources, increasing the Marcellus Shale area dedication to MarkWest from approximately 167,000 gross operated acres to over 360,000 gross operated acres.
Natural gas and NGL processing capacity will be built out
To support this growth profile the joint venture will expand processing capabilities at the Sherwood Complex in West Virginia. The Sherwood complex, initiated in 2012, has grown to be the single largest gas processing complex in the Northeast U.S. with six cryogenic processing facilities totaling 1.2 bcf/d.
Source: MarkWest Energy
Three new processing facilities will be built in the joint venture, totaling 600 MMcf/d of processing capacity for Antero. Two of these facilities will begin construction in 2017, while the third will begin construction in Q1 2018. If necessary, the joint venture may build up to eight more facilities to support production by Antero Resources.
NGL production will also be supported at the Hopedale complex in Ohio. The largest fractionation facility in the Marcellus and Utica shales, the Hopedale complex has the capacity to provide 180 MBPD of NGL. The joint venture will build 20 MBPD of capacity at the Hopedale, with the option to expand further if need be.
Source: MarkWest Energy
MarkWest will contribute existing assets to the joint venture consisting of the three processing facilities currently under construction at the Sherwood Complex and their associated infrastructure. Antero Midstream will initially contribute approximately $155 million for its share of assets at the Sherwood and Hopedale complexes. Going forward, it is expected that MarkWest and Antero Midstream will each contribute 50 percent of the future capital investments for the joint venture.
Antero Midstream announced an offering of 5 million shares on Monday in an equity offering meant to fund its share of this joint venture. MPLX announced a $2.25 billion debt offering on Tuesday, intended to fund, among other things, its share of the venture.
