Natural gas processor and distributor MarkWest Energy Partners L.P. MWE has declared an increase in quarterly cash distribution. This follows the partnership’s merger announcement with MPLX LP MPLX – a partnership controlled by independent oil refiner and marketer Marathon Petroleum Corporation MPC.

MarkWest has announced second quarter distribution of 92 cents per unit ($3.68 annualized). This marks a 4 cent or 4.5% increase from the second quarter of 2014 and a 1 cent or 1.1% hike sequentially. The partnership added that this new distribution will be paid on Aug 14 to uniholders of record as on Aug 6.

MarkWest has a track record of consistent distribution growth. Its new quarterly distribution of 92 cents marks an increase of 268% from its distribution rate of 25 cents per unit at the time of its 2002 IPO. Moreover, with the proposed MPLX merger, the combined entity will likely witness a 25% compound annual distribution growth rate through 2017.

The merger with MPLX is expected to positively impact MarkWest’s financials though enhanced scale of operations and greater expansion and growth opportunities. Additionally, the new partnership will benefit from Marathon Petroleum’s robust balance sheet.

Despite these positives, investors should note that the distribution offered by the combined entity would be much lower than MarkWest’s current distribution.

Currently, MarkWest Energy carries a Zacks Rank #3 (Hold).

A better-ranked player from the Oil and Gas Production/Pipeline MLP industry is NuStar Energy L.P. NS, which sports a Zacks Rank #1 (Strong Buy).

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