Perhaps the most desirable midstream asset in the world today is a pipeline network atop the Appalachian shales, with outlets to the export and petrochemical markets on the Gulf Coast as well as the major population centers of the Northeast and the Mid-Atlantic.

It’s easy to see why: no shale basin is delivering the sort of production growth recently seen in the Marcellus, and overlapping Utica is next in line. Low production costs have made natural gas drilling profitable here even at today’s low gas prices, and the deposits’ proximity to the densely settled Atlantic seaboard and the industrialized Midwest has proven to be money in the bank for pipeline operators.

Source: company presentation

Yet when Columbia Pipeline Partners (NYSE: CPPL) went public in February via a record-breaking $1.1 billion initial public offering backed by a huge pipeline system in exactly the right place, we passed.

Why? Because the price just got too rich. The IPO priced at $23 ($3 above the midpoint of the suggested range) and opened at $28 per unit. CPPL still trades above $27 today, for a 2.5% annual yield based on its initial distribution.

Which, in an age in which Shell Midstream (NYSE: SHLX) can yield 1.6%, is not too bad, for a partnership that has pledged annual distribution growth of 20% until 2020. But it’s not very good either, considering that within three years CPPL will have to match its distribution increases dollar for dollar with incentive payments to its general partner. At that point, limited partners will be entitled to only half of the partnership’s returns on any new growth projects or acquisitions while footing the entire bill. This is the routine final destination of all such “incentive distribution rights” schemes.

So far, CPPL has not made us regret our hesitation in the manner of 1.7% yielding Dominion Midstream Partners (NYSE: DM). The age of exploitation of the Marcellus and the Utica is still quite young, but obviously the lion’s share of the benefits of CPPL’s growth will accrue to its sponsor and general partner.

Source: company presentation

That would be the Columbia Pipeline Group (CPG), which will trade on the New York Stock Exchange under the symbol CPGX after getting spun off from parent NiSource (NYSE: NI) at the end of the month. NiSource will keep its name and the boring, slow-growing regulated utility business. Meanwhile, CPG will inherit majority control of 15,000 miles of ideally situated pipes and related midstream assets, the general partner of CPPL along with its incentive distribution rights and nearly half of the common LP units.

NiSource’s CEO is making the jump to head CPG — a good tell as to where the bread in any split is buttered.

CPG owns more than 84% of the OpCo holding company where all of its physical assets are warehoused, and CPPL the rest. While there are no plans to sell more of the OpCo to CPPL this year, CPG is counting on CPPL to provide it with $4 billion of equity financing for growth projects through 2018. As a result, the public’s effective ownership of OpCo is expected to increase from 8% today to 40% or so by 2020.

Source: company presentation

The money raised will be applied toward a projected $8.4 billion in capital projects over the next five years, mostly providing expanded market access for Marcellus and Utica drillers. The projects are backed by long-term, fee-based agreements just like 95% of Columbia’s current revenue.

The investments will support CPG’s plans to provide average annual dividend growth of 15% over the next five years.

The spinoff will be accomplished on July 1 via the tax-free issuance of one CPGX share for every NI share, to shareholders of record as of June 19. That means NI shares must be purchased by June 16 to qualify for the CPGX stock dividend. CPGX will begin trading on a when-issued basis on June 17, which is when we’ll get the first inkling of how the market values its high growth trajectory and its initial annual dividend of 50 cents a share.

With the CPPL affiliate yielding 2.5% despite the coming drain from incentive distribution rights, it’s hard to see CPGX initially yielding more than 1.6% or so. That would equate to a share price of $31.25. Based on NI’s current share price of $46.35 the value of the post-spinoff utility stub would then presumably be $15.10 a share. Which seems too low, because the stub plans to pay an annual dividend of 62 cents a share, for an extrapolated yield of 4.1%.

The hope here is that the market is underestimating the embedded value of CPG within NiSource, which might mean a quick gain for shareholders participating in the split if the standalone CPG gets bid up like comparable high-growth midstream general partners.

We’re recommending the purchase of NI shares by June 16 mainly for the CPGX stock dividend. Once the spinoff is completed, we will reassess the wisdom of holding on to the NiSource stub. At that point CPGX will reside in the Growth Portfolio, while NI would qualify as a Conservative recommendation.

Note that CPG will start out with $2.7 billion of debt after extinguishing a $1.2 billion of intracompany debt and paying NiSource a $1.45 billion dividend. But the debt burden will fall within industry norms and both CPG and NiSource are expected to retain investment-grade credit ratings.

It seems likely that NiSource and CPG will be worth more after the split than ever before as a single entity. Buy NI by June 16 below $50 or CPGX-WI thereafter below $34.