Consol Energy Inc. and Noble Energy Inc., which joined forces in the Marcellus Shale almost three years ago, are planning to offer stock in a natural gas pipeline partnership that handles output from jointly owned acreage.
The companies submitted a registration statement to regulators today proposing an initial public offering for a minority stake in a master-limited partnership, according to separate statements. The offering is expected to be completed in the third or fourth quarter, subject to market conditions and approval of Noble’s board, Consol said.
Noble agreed in 2011 to pay $1.07 billion for half of Consol’s properties in the Marcellus, one of the largest U.S. shale-gas deposits. Houston-based Noble is also paying a third of Consol’s drilling costs. Consol’s production from the Marcellus Shale in Pennsylvania and West Virginia is expected to increase 87 percent this year, the Canonsburg, Pennsylvania-based company said in slides for its analyst day presentation today.
Master-limited partnerships have become the financial structure of choice for pipelines. They don’t pay corporate taxes and enable companies to raise cash while retaining control of the business. Consol and Noble will control the general partner and own a majority of the MLP’s common units through Cone Gathering LLC, a 50-50 joint venture.
A successful offering may add 50 cents a share to Consol’s value, Lucas Pipes, a New York-based analyst for Brean Capital LLC, wrote today in a note to clients. Pipes rates the shares a buy.
Consol fell 4.6 percent to $44.82 at the close in New York. Noble gained 0.6 percent to $75.81.