The most recent deal in the midstream MLP industry strengthens the thesis that the sector is severely undervalued and offers investors great growth opportunities. Sometimes the market gets it wrong, here's how to take advantage.

There's a lot going on among master limited partnerships (MLPs) and the midstream oil and gas industry right now. And I'm not talking about the 50% fall in oil prices over the last year.

To start, both Kinder Morgan Inc (NYSE: KMI) and Williams Companies (NYSE: WMB)decided to re-consolidate their operations by buying up their respective MLPs. A move that could spur others to follow suit, helping to reduce their dependence on capital markets.

Then, more recently, Energy Transfer Equity (NYSE:ETE) has stepped up with a $64 a share offer for Williams Companies; an offer that the latter has rejected. With $35 billion and $44 billion market caps, respectively, this would create a midstream giant.

However, the wave of “interesting” deals in the MLP industry continues, with things heating up even more last week.

The $5.7 billion market cap MLP, MPLX LP (NYSE: MPLX), is buying the $11.9 billion market cap natural gas transporter, Markwest Energy Partners LP (NYSE: MWE).

MPLX is paying close to $16 billion for Markwest in one of the biggest deals in the oil industry over the last year. The two are joining forces to create the fourth largest MLP.

The key here is that MLPX is controlled by the $29.6 billion market cap pipeline and refinery operator, Marathon Petroleum Corp (NYSE: MPC).

The price action is the most interesting part of this deal. Certain investors are not excited about the buyout.

Marathon Petroleum shares are up 10% over the last week and Markwest units are up close to 18%. However, MPLX saw its units crater 17% last week. The market is a bit concerned about what adding a natural gas processor (Markwest) to an oil transporter (MPLX) does to growth.