Marathon Petroleum to expand midstream assets portfolio with $15.8bn MarkWest acquisition

US based Marathon Petroleum (MPC) will acquire natural gas processing assets with a $15.8bn acquisition of MarkWest Energy Partners.

The purchase, to be done in stock and cash, will lead to the fourth-largest master limited partnership, and the combined company will have a market capitalisation of $21bn.

Marathon Petroleum will conduct the acquisition through its pipeline unit MPLX.

Marathon Petroleum president and chief executive officer Gary R. Heminger said: “This combination is a significant step in executing MPC’s strategy to grow its higher-valued, stable cash flow midstream business, by transforming MPLX into a large-cap, diversified master limited partnership.

“We are very pleased that MPLX and MarkWest will join forces and provide us with opportunities to increase our participation in the US energy infrastructure build-out.

“MPC’s strong balance sheet and liquidity will enable MarkWest to accelerate organic growth in some of the nation’s most economic and prolific liquids-rich natural gas resource plays.

“We expect the combination of these projects and MPC’s MLP-eligible midstream assets to support a strong distribution growth profile over an extended period of time for MPLX.”

This MPLX transaction has deferred its acquisition of MPC’s marine transportation assets which was likely to be done this year.

The deal is subject to MarkWest shareholder approval, customary closing conditions and regulatory approvals.

This transaction, likely to be closed within the year, will see MPC operating as general partner of MPLX, owning around 19% of MPLX’s common units.