Zacks_Analysts' Blog : MarkWest Energy: Worth a Look - Analyst Blog

Units of MarkWest Energy Partners L.P. (MWE) are currently trading close to its 52-week high of $56.82. The pipeline operator has seen its share price climb approximately 18% since the beginning of October this year, as investors have been buying the stock for its attractive fundamentals and positive outlook.

Denver, Colorado-based MarkWest Energy is engaged in the gathering, processing and transmission of natural gas, transportation, fractionation and storage of natural gas liquids (NGLs), and the gathering and transportation of crude oil.

MarkWest owns a high-quality and diverse portfolio of midstream assets that generate stable and recurring revenues based on long-term fee-based contracts. Over the last few years, the partnership has consolidated its position in the midstream business, achieved through a combination of organic efforts and accretive acquisitions.

With its proven track record of supporting producers in the development of shale plays, MarkWest is in a great position to participate in infrastructure upgrade that will be required for the development of the leasehold assets.

Last year, MarkWest teamed up with another MLP, Sunoco Logistics Partners L.P. (SXL), to build a distribution system to transport ethane produced in the Marcellus Shale Basin (in north eastern U.S.) to markets along the Gulf Coast. We believe that the initiative, known as the ‘Mariner Project,’ offers several benefits.

Not only will the project help MarkWest to profit from the direct opportunity of capturing demand for ethane takeaway capacity at Marcellus, but it will also support higher gathering system volumes and higher ethane production.

We also appreciate MarkWest’s steady improvement in its liquidity/cash flow position and its track record of consistent distribution growth. Furthermore, with 192% distribution growth since the IPO in May 2002, we are confident of the partnership’s total return potential.

On the whole, we believe MarkWest is favorably positioned to continue accelerating revenue and earnings growth over the next few quarters. Our bullish stance is supported by a Zacks #1 Rank, which translates into a short-term Strong Buy rating.