MarkWest Ups Stake in Marcellus Shale Play (MWE)

Natural gas pipeline and processing company MarkWest Energy Partners LP (NYSE: MWE) will pay about $2 billion to private equity firm Energy & Minerals Group for the firm’s 49% stake in MarkWest Liberty Midstream & Resources, LLC. The joint venture was to build out infrastructure to gather, process, and transport shale gas from the Marcellus shale play.

Under terms of the deal, MarkWest will pay its partner $1 billion in cash and issue 19.95 million shares of Class B units to EMG, which the private equity firm can convert on a one-for-one basis for Class A common units beginning in 2013 at a pace of 20% annually. The transaction is expected to close by December 31st.

The two companies also said they are planning another joint venture in the Utica shale play in eastern Ohio, and that EMG will “fund a majority of the initial capital expenditures required to develop the Utica midstream infrastructure.” The new venture is also planned to build out infrastructure for gathering, processing, and transporting natural gas. The two companies expect to issue more details of the new project in early January.