1 Not So Obvious Play in the Utica Shale

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

There is a lot of hype surrounding the Utica shale right now. Geologists anticipate the play's energy profile to be similar to the booming Marcellus shale. Companies like Chesapeake Energy that got in early bought up acreage at low prices, and have subsequently made a killing selling it to other oil and gas outfits willing to pay a premium rather than miss out on potential success.

Paying high prices for acreage that may or may not produce commercially viable amounts of energy is a risk for these companies. There is gas in the Utica, and any given company may wind up the big winner. But there is a far less risky play here -- midstream companies such as MarkWest Energy Partners (NYSE: MWE  ) .

Big plans
MarkWest recently announced plans to build a 200 MMCF per day processing plant and establish infrastructure to add 100,000 barrels per day of fractionation, storage, and marketing capacity. Fractionation refers to separating the various elements of the natural gas stream. The company is designing yet another processing plant for the Utica, capacity has yet to be announced.

Precedent for success
The upside to MarkWest in the Utica is based on its success in the Marcellus shale. The company has laid plans for two new processing plants in the region with a combined capacity of 400 MMCF/D. Three oil and gas producers have signed agreements with MarkWest that will support the two new facilities: CONSOL Energy (NYSE: CNX  ) , Noble Energy (NYSE: NBL  ) , and Range Resources (NYSE: RRC  ) .

Last year, MarkWest purchased a cryogenic natural gas processing plant from Magnum Hunter Resources (NYSE: MHR  ) . The plant has a capacity of 200 MMCFE per day and is expected to come on line in the third quarter of 2012.

The new plant will sit adjacent to another plant MarkWest has coming on line in the second quarter. This plant has capacity of 120 MMCFE/D, which means that total new capacity in 2012 should reach 320 MMCFE by the fourth quarter of this year. Fractionation services will be handled at MarkWest's plant in the other Houston -- Houston, Pa.

Foolish takeaway
When these projects come on line, MarkWest will be the top midstream provider in the Northeast, operating 2.3 BCF/D of processing capacity and almost 300,000 barrels per day of fractionation. For that reason, I'm heading over to CAPS to give MarkWest Energy Partners a green thumbs-up.

Want to stay up to date on MarkWest Energy Partners news and analysis? Click here to add the company to My Watchlist.

Fool contributor Aimee Duffy doesn't own shares of the companies mentioned in this article. If you have the energy, check out what she's keeping an eye on by following her on Twitter @TMFDuffy.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1771675, ~/Articles/ArticleHandler.aspx, 5/31/2016 11:32:46 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 17,798.64 -74.58 -0.42%
S&P 500 2,096.63 -2.43 -0.12%
NASD 4,938.83 5.32 0.11%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/4/2015 4:05 PM
MWE $0.00 Down +0.00 +0.00%
MarkWest Energy Pa… CAPS Rating: ****
CNX $15.29 Up +0.44 +2.96%
CONSOL Energy, Inc… CAPS Rating: ***
MHRCQ $0.00 Down +0.00 +0.00%
Magnum Hunter Reso… CAPS Rating: **
NBL $36.09 Up +0.21 +0.59%
Noble Energy, Inc. CAPS Rating: ***
RRC $43.08 Up +1.72 +4.16%
Range Resources CAPS Rating: ***