The Zacks Analyst Blog Highlights: MarkWest Energy, Rex Energy, International Paper, Weyerhaeuser and MeadWestvaco

News provided by

Jun 05, 2012, 09:30 ET

CHICAGO, June 5, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include MarkWest Energy Partners L.P. (NYSE:MWE), Rex Energy Corporation (Nasdaq:REXX), International Paper Co. (NYSE:IP), Weyerhaeuser Co.'s (NYSE:WY) and MeadWestvaco Corporation (NYSE:MWV).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday's Analyst Blog:

MarkWest Absorbs Keystone

MarkWest Energy Partners L.P. (NYSE:MWE) announced that it has completed the purchase of Keystone Midstream Services, LLC. The acquisition, which was announced in early May, was made for a price of $512 million.

MarkWest bought the 100% ownership interest in Keystone from Stonehenge Energy Resources, L.P., and affiliates of Rex Energy Corporation (Nasdaq:REXX) and Sumitomo Corporation.

With the acquisition, MarkWest gained access to Keystone's properties across Butler County, Pennsylvania that includes two cryogenic gas processing plants with a combined capacity of 90 million cubic feet per day (MMcfd), a gas gathering system and related field compression.

This transaction also enriched MarkWest's asset base in the rich natural gas reserves in the Marcellus Shale to northwest Pennsylvania and eastern Ohio.

MarkWest intends to invest $500 million over the next five years in the development and extension of the gathering and processing facilities of Keystone. MarkWest also targets to achieve gas volume production rate of 170 million cubic feet per day (MMcfd) at the end of 2013 from the current level of 40 MMcfd. This rate is expected to go up to 350 MMcfd by 2016.

Apart from these properties, MarkWest also received an 895 square mile acreage from Rex Energy and Sumitomo. The former will be engaged in gathering and processing of rich gas and natural gas liquids from the area under long-term, fee-based contracts.

MarkWest is a master limited partnership (MLP) engaged in the gathering, processing and transmission of natural gas, transportation, fractionation and storage of natural gas liquids, and the gathering and transportation of crude oil.

We are also maintaining a long-term Outperform recommendation on the stock, implying that we see it as an attractive investment option.

International Paper Divests 3 Mills

International Paper Co. (NYSE:IP) is selling its three containerboard mills for $470 million to fulfill its agreement with the Department of Justice (DoJ) in connection with its acquisition of Temple-Inland.

As per the mandates of the DoJ, International Paper was required to divest 970,000 tons of containerboard capacity. International Paper had agreed to divest Temple-Inland's mills in Ontario, California and New Johnsonville, Tennessee, and its existing mill in Hueneme, California. The New Johnsonville mill is being sold to Hood Companies, Inc. while the other two mills are being sold to New-Indy Containerboard LLC, a newly formed joint venture of The Kraft Group, LLC and Schwarz Partners, LP.

In February this year, after an eight-month chase, International Paper completed the acquisition of Temple-Inland for nearly $4.5 million or $32.00 per share. The deal included an assumption of $700 million of Temple-Inland debt.

The integration is already on track. The company generated $10 million in synergies in the first partial quarter of ownership. The transaction is expected to be accretive to earnings within 12 months of closing and incrementally beyond 2013. The company has recently raised its synergy expectation from the Temple-Inland acquisition to $400 million (from $300 million) over the first two years. Moreover, the combination will fortify the company's packaging business in North America by increasing its share in the corrugated packaging market to 34% from the current 27%.

International Paper's acquisition of Texas-based Temple-Inland is its largest since the August 2008 acquisition of Weyerhaeuser Co.'s (NYSE:WY) corrugated-packaging business for $6 billion. Given the magnitude of the Temple-Inland deal, integration risks continue to be a challenge. In addition, International Paper's failure to realize the projected synergies from the acquisition could negatively impact the company's earnings. The divestiture of the three mills, as directed by DoJ, takes away some of the benefits from the merger.

We maintain our Neutral recommendation on International Paper. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.

Based in Memphis, Tennessee, International Paper Company is a global paper and packaging company with operations in North America, Europe, Latin America, Russia, Asia, and North Africa. International Paper conducts its businesses through five segments. It competes with companies like MeadWestvaco Corporation (NYSE:MWV) and Weyerhaeuser Co.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com

SOURCE Zacks Investment Research, Inc.