CONE Midstream launches IPO

Consol and Noble Energy hope to raise $422.6m for the MLP they established in June through an initial public offering.

CONE Midstream Partners, a master limited partnership (MLP) established by Consol Energy and Noble Energy in June, has launched an initial public offering (IPO) of 17,500,000 common units representing limited partner interests, the two companies said in a recent statement.

With units being offered at a price range of between $19 and $21 each, the MLP’s sponsors are looking to raise about $423 million through the IPO, which according to the Nasdaq website, is expected to be priced on Thursday.

The common units being offered represent a 29.4 percent limited partner interest in CONE Midstream Partners, while Consol and Noble Energy will each own a 34.3 percent stake in the MLP.

However, underwriters of the IPO will have a 30-day option to purchase up to an additional 2,625,000 common units should the offering be oversubscribed. In that case, the common units on offer would represent a 33.8 percent limited partner interest in CONE Midstream Partners, with Consol and Noble Energy each holding a 32.1 percent stake.

The units will be listed on the New York Stock Exchange (NYSE) under the ticker symbol “CNNX.”

In June, Noble Energy and Consol launched CONE Gathering – a 50/50 joint venture, which owns the general partner of the MLP – to own, operate and develop the natural gas midstream assets the two companies jointly own in the Marcellus Shale, one of the largest shale regions in the US that spans New York, Pennsylvania, West Virginia, Ohio and Maryland.

Through their ownership of CONE Gathering, Noble Energy and Consol will own a 2 percent general partner interest and the incentive distribution rights in CONE Midstream Partners, according to the press statement.

The two companies first teamed up in September 2011 by forming an upstream joint venture. Since then, Noble Energy and Consol have invested more than $458 million in midstream infrastructure, according to the prospectus CONE Midstream Partners filed with the Securities and Exchange Commission (SEC).

The MLP’s initial assets include natural gas gathering pipelines, compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilisation facilities.

“We believe that our strategically located assets, our relationship with our Sponsors and our Sponsors’ intention to use us as their primary midstream services company in the Marcellus Shale position us to become a leading midstream company,” CONE Midstream stated in the prospectus.

In addition to the Marcellus Shale, New York-listed Noble Energy, which focuses on oil and gas exploration and production, also has core operations onshore in Colorado’s DJ basin, in the deepwater Gulf of Mexico, offshore Eastern Mediterranean, and offshore West Africa.

Based in Pittsburgh and also listed on the New York Stock Exchange, Consol Energy is an independent natural gas exploration, development and production company, with operations centred in the major shale formations of the Appalachian basin.