OREANDA-NEWS. Marathon Petroleum-backed MPLX will acquire MarkWest Energy Partners, the largest NGL midstream company in the Marcellus and Utica shales, in a $15.8bn transaction.

The deal gives Marathon access to MarkWest NGLs and condensate and a pipeline footprint with access to the East coast, including the LPG export terminal in Marcus Hook, Pennsylvania.

"The integration potential is notable," MPLX chief executive Gary Heminger told analysts on a conference call today. The combined entity will be able to "convert NGLs into higher-value blending components. We are developing solutions to moving increasing amounts of NGLs and refined products to the US east coast for blending and export."

Marathon may also use MarkWest's footprint to supply alkylate and gasoline blendstocks to other plants on the US Gulf coast, Heminger said.

MPLX was formed by refiner Marathon in 2012 to own and operate crude and refined products assets such as terminals and pipelines. Current assets include a 99.5pc equity interest in a network of crude and products pipelines in the midcontinent and Gulf coast and a 100pc interest in a butane storage cavern in West Virginia.

Earlier this year MPLX announced plans to construct the Cornerstone pipeline, which will carry butane, natural gasoline and condensate from MarkWest's fractionation and processing facilities in Cadiz and Scio, Ohio, to its Canton refinery and Ohio River pipeline (ORPL) East Sparta tank farm.

The MarkWest combination will also help supply Marathon's refineries in Wood River and Robinson, Illinois, and Lima, Ohio, with butane and other NGLs.

MarkWest currently operates 34 gas processing and NGL fractionation facilities throughout the Marcellus and Utica shales and has another 18 facilities under construction in the region.

The merger will continue MarkWest's ongoing long term contracts as in joint venture agreements with customers in the midcontinent.

The agreements "are a critical part of our relationships, those are long-term agreements in place and they will continue," MarkWest chief executive Frank Semple said. "We have no plans at this time to buy them out."

MarkWest's previously announced initiative to acquire marine transportation assets is on hold, Heminger said, as the combination "eliminates the immediate need for MLP marine transportation assets." Marathon's assets include 203 owned and 12 leased inland barges. MarkWest already operates a river barge loading terminal on the Ohio river.

The merger is expected to be finalized in the fourth quarter. MarkWest unit holders will receive 1.09 MPLX units and a one-time payment of $3.37 per MarkWest common unit. MPLX sponsor Marathon will contribute $675mn to fund the one-time payment. MPLX will also take on $4.2bn in MarkWest debt.