CONE Midstream Partners LP, an MLP formed by CONSOL and Noble to own pipelines in the Marcellus Shale, announced terms for its IPO on Wednesday. The Canonsburg, PA-based company plans to raise $350 million by offering 17.5 million units at a price range of $19 to $21. At the midpoint of the proposed range, CONE Midstream would command a fully diluted market value of $1.2 billion.
The joint venture will be controlled by CONSOL Energy (NYSE: CNX) and Noble Energy (NYSE: NBL). MLP IPOs have generally outperformed in 2014 as investors turn to transparent cash flows with growth potential.
The company operates under long-term, fixed-fee gathering agreements with each of its sponsors, covering 496,000 net acres in the Marcellus Shale. At the end of June, the combined daily gross wellhead production used by CONSOL and Noble averaged 520 MMcfe/d on CONE's dedicated acreage, a 100% CAGR since 2011. It expects that production to grow to about 700 MMcfe/d by year-end. CONE should also take advantage of its sponsors' increased focus on horizontal wells in the Marcellus Shale, which are expected to reach 177 by the end of 2014, up from 111 in 2013.
Revenue increased 110% to $52 million for the six months ended June 30, 2014 as CONE's parent companies established their drilling and development programs on the Marcellus and caused throughput volumes to increase. The company had a net income of $22 million, up from $7 million in the prior year period. As an MLP, CONE will distribute all available cash each quarter.
CONE Midstream Partners LP, which was founded in 2011 and booked $93 million in sales for the 12 months ended June 30, 2014, plans to list on the NYSE under the symbol CNNX. Wells Fargo Securities, BofA Merrill Lynch, Citi, J.P. Morgan, Baird, Barclays, Deutsche Bank, Goldman Sachs, Morgan Stanley, Credit Suisse and RBC Capital Markets are the joint bookrunners on the deal. It is expected to price during the week of September 22, 2014.
