Noble shelves midstream IPO amid equity slump

NobleEnergyLogoBy Robert Grattan – November 20, 2015 – FuelFix

HOUSTON — About one week after outlining the final details of its $237 million-plus midstream initial public offering, oil and gas producer Noble Energy has put the financing deal on indefinite hold.

Noble Energy said late Thursday it won’t follow through with the offering of Noble Midstream Partners LP, a master limited partnership it created to hold its midstream assets primarily in Colorado. The postponement is a surprising reversal from last week, when the Houston-based producer said it hoped to raise at least $237.5 million by selling investors 12.5 million shares priced between $19 and $21.

Not raising the money may not affect Noble Energy’s core business of drilling in U.S. shale and in offshore fields across the globe. But it does raise questions about how Noble will replace the funds it hoped to raise through the offering and about how the independent driller plans to monetize the network of infrastructure assets it has built over the years.

Noble said in a news release that it canceled the offering due to “unfavorable equity market conditions.” The company declined to comment further.

The unfavorable conditions likely include a slide in equity prices among the companies, known in the industry as midstream,  that transport and process oil and gas. The Alerian MLP Index, a broad gauge of the 50 largest master limited partnerships in the sector, has fallen by nearly 40 percent over the past year as investors have fled.

This sharp drop has made selling stock to raise money so expensive that even some of the largest, most financially stable midstream companies in North America no longer consider it worth their while.

Noble Energy didn’t say it would abandon the plan to market shares in its partnership, but didn’t present a timeline for an eventual offering either.

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