A Noble Undertaking

The collapse in commodity prices has not been good for partnerships looking to go public. In 2014 there were 18 partnership IPOs, but thus far this year there has been just a handful. There were none at all during the third quarter, but in October Noble Midstream Partners (NBLX) filed an initial registration statement to raise up to $100 million in a public offering.

Noble Midstream Partners was recently formed by Noble Energy (NYSE: NBL) to provide crude oil, natural gas, and water-related midstream services for NBL. Noble Midstream Partners has entered into multiple fee-based commercial agreements with Noble Energy, each with an initial term of 15 years, to provide an array of services critical to Noble’s upstream operations in the Denver-Julesburg (DJ) Basin in Colorado.

Noble is one of the largest drillers in the DJ Basin, where in 2014 it produced an average of 101,000 barrels of oil equivalent (BOE) per day of crude oil, condensate, natural gas and natural gas liquids, or NGLs, with crude oil and NGLs accounting for 66% of the output.

Noble Midstream Partners’ initial assets include crude oil gathering pipelines, crude oil treating facilities, natural gas gathering pipelines and a centralized gathering facility in the DJ Basin. In addition, it’s providing water-related services critical to Noble’s drilling, including the storage and distribution of fresh water for use in drilling and completion operations and the collection, cleaning, recycling and disposal of flowback and produced water.

Most of the current facilities are located in two areas of Weld County, Colorado — the Wells Ranch integrated development plan area (IDP), and the East Pony IDP. Core Assets generate substantially all current cash flows, and include:

  • Approximately 25 miles of liquids pipelines that carry crude oil and saltwater serving the Wells Ranch IDP
  • Approximately 30 miles of natural gas gathering pipelines serving the Wells Ranch IDP
  • Storage capacity for up to 96,000 barrels (bbls) of crude oil and 32,000 bbls of saltwater at the Wells Ranch centralized gathering facility
  • Approximately 20 miles of fresh water pipelines serving the Wells Ranch IDP
  • A fresh water storage system serving the Wells Ranch IDP
  • Approximately 15 miles of crude oil gathering pipelines servicing the East Pony IDP
  • The Briggsdale and Platteville crude oil treating facilities
  • A 3.33% ownership interest in White Cliffs Pipeline LLC, which has a current capacity of approximately 150,000 bpd of crude oil and connects the DJ Basin to Rose Rock Midstream’s (NYSE: RRMS) storage facility in Cushing, Oklahoma

The initial SEC filing does not specify the projected minimum quarterly distribution or the sponsor’s incentive distribution rights (IDRs), but it does include unaudited pro forma financials for the past two calendar years, as well as projections through 2016.

It projects revenue of $135.1 million in 2016, up from $104.4 million in 2014 and $102.5 million in the 12 months through June. The projected revenue increase is attributed primarily to increased throughput on its gathering systems.

In the 12 months through June the partnership’s assets generated EBITDA of $40.6 million, up from $37.8 million in 2014. Noble projects partnership EBITDA of $59.5 million in 2016 and estimates distributable cash flow at $52.4 million.

We will keep readers updated on this pending IPO as details emerge, as well as on other MLP IPOs likely to emerge with the eventual improvement in market conditions.

(Follow Robert Rapier on Twitter, LinkedIn, or Facebook.)

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