Noble Midstream Jumps in Debut as Colorado Drops Frack Ban

  • Good timing helps boost shares by as much as 21 percent
  • Colorado proposals to limit energy development were defeated

After previously tabling its plans to go public, Noble Midstream Partners LP zoomed above expectations as investors priced in a more favorable market and more regulatory certainty in Colorado.

Noble Midstream, the master-limited partnership backed by Noble Energy Inc., jumped as much as 21 percent to $27.32 in New York trading on Thursday. A day earlier, the company sold 12.5 million shares for $22.50 each, above the marketed range of $19 to $21.

The company postponed its IPO in November, citing "unfavorable equity market conditions." Last month, that turned around after the failure of a Colorado initiative that would have let local governments ban fracking and prohibit oil and gas development within 2,500 feet of homes. Noble Midstream’s assets are mainly in Colorado, and it’s the main midstream provider for Noble Energy, among the largest producers of liquids in the state’s DJ Basin.

Timing for the IPO makes sense because the market has been more favorable for MLPs and the "regulatory overhang" in Colorado has lifted, said Phillips Johnston, an analyst at Capital One Securities LLC, in a note last week.

The appeal of oil and natural gas pipeline partnerships is reviving after two years in the doldrums with the energy downturn. Enbridge Inc. recently announced its takeover of Spectra Energy Corp. in a deal that will create a pipeline giant that controls four MLPs. The companies have said they’ll continue to operate separately, though analysts say they expect they’ll eventually be consolidated.

Increasing Activity

Noble Midstream has cited increasing activity in Colorado’s DJ Basin, as well as long-term, fixed-fee contracts, among its strengths. The IPO pricing is also positive for Noble Energy’s shares, said Scott Hanold, an analyst at RBC Capital Markets, in a note on Wednesday. The partnership will likely benefit the producer’s growth, he said.

Noble Energy’s stock rose as much as 2.1 percent on Thursday and is up about 4.6 percent this year. Noble Midstream was up 18 percent to $26.45 at 1:32 p.m. in New York.

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