Marathon energy firm to acquire Marcellus shale gas processor

A Findlay, Ohio-based energy asset firm owned by Marathon Petroleum Corp. reached a deal to acquire Denver-based midstream natural gas firm MarkWest Energy Partners in a deal valued at about $15.8 billion, officials said Monday.

MarkWest will become a wholly owned subsidiary of Marathon's MPLX LP following the close of the deal, which is expected to take place in the fourth quarter of 2015.

MPLX's assets include ownership of crude oil pipelines in the Midwest and Gulf Coast regions and a butane storage cavern in West Virginia. MarkWest is the No. 2 player by market share in processing of natural gas from the Marcellus Shale and Utica Shale.

The combined company will have a total market capitalization of $21 billion, purportedly making it the fourth-largest limited master partnership.

MPLX will abandon its previously proposed acquisition of Marathon's marine transportation assets, the companies said.

"This combination creates a unique new competitor in the midstream sector," MPLX CEO Gary R. Heminger said in a statement. "We are thrilled to be joining forces with the MarkWest team, which has built a sterling reputation for customer service and its ability to execute on strategic growth projects."

MarkWest's executives will take on similar roles at MPLX, with Heminger remaining CEO. MarkWest CEO Frank Semple will become executive vice chairman of MPLX.

MPLX is making a one-time $20 billion payment to acquire MarkWest and will assume $4.2 billion in debt.

Marathon Petroleum is kicking in $675 million in cash to support the acquisition.

The deal reflects a 32% premium of Friday's closing price of MarkWest shares.

Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.