Antero Midstream Partners LP (AM) is a growth-oriented limited partnership formed by Antero Resources Corporation (NYSE: AR) to own, operate and develop midstream energy assets to service Antero's rapidly increasing production. It is based in Denver, CO.
Ten other companies are scheduled for the week of Nov. 3, 2014. The full IPO calendar is available at IPOpremium.
Manager, Joint-managers: Barclays, Citigroup, Wells Fargo Securities
Co-managers: Credit Suisse, J.P. Morgan, Morgan Stanley, Baird, BMO Capital Markets, Raymond James, Tudor, Pickering, Holt, Scotiabank, Howard Weil
End of lockup (180 days): Monday, May 4, 2015
End of 25-day quiet period: Monday, December 1, 2014
AM scheduled a $750 million IPO with a market capitalization of $3 billion at a price range midpoint of $20 for Wednesday, Nov. 5, 2014 on NYSE.
Antero Midstream IPO Summary
AM is a growth-oriented limited partnership formed by Antero Resources Corporation (NYSE: AR) to own, operate and develop midstream energy assets to service Antero's rapidly increasing production.
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Valuation |
Mrkt Cap (mm) |
Price /Sls |
Projected yld |
Price /BkVlue |
Price /TanBV |
% offered in IPO |
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Est 12mos ended Sept '15 |
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Antero Midstream Partners LP (AM) |
$3,040 |
16.3 |
3.4% |
2.8 |
2.8 |
25% |
AM IPO Conclusion
Positive
Projected yld of 3.4%
Non public stock 100% owned by AR, $13bb market cap
308% projected rev growth
Business
AM is a growth-oriented limited partnership formed by Antero Resources Corporation (AR) to own, operate and develop midstream energy assets to service Antero's rapidly increasing production.
AM’s assets consist of gathering pipelines and compressor stations through which AM provides midstream services to Antero under a long-term, fixed-fee contract.
AM’s assets are located in the rapidly developing liquids-rich southwestern core of the Marcellus Shale in northwest West Virginia and liquids-rich core of the Utica Shale in southern Ohio, which Antero believes are two of the premier North American shale plays.
AM believes that its strategically located assets and its relationship with Antero position its to become a leading midstream energy company serving the MarcellAMand Utica Shales.
Pursuant to its long-term contract with Antero, AM has secured a 20-year dedication covering substantially all of Antero's current and future acreage for gathering and compression services.
All of Antero's existing acreage is dedicated to AM for gathering and compression services except for the existing third-party commitments, which includes 131,000 Marcellus Shale net leasehold acres characterized by dry gas and liquids-rich production that have been previously dedicated to third-party gatherers.
Net of the excluded acreage, AM’s contract for gathering and compression services covers approximately 370,000 net leasehold acres held by Antero as of September 5, 2014. In addition to Antero's existing acreage dedication, AM’s agreement provides that any acreage Antero acquires in the future will be dedicated to AM for gathering and compression services.
In April 2014, AM began providing condensate gathering services to Antero under the gathering and compression agreement.
AM has an option to purchase Antero's fresh water distribution systems at fair market value. In addition, Antero has an option to participate for up to a 20% non-operating equity interest in the 800-mile Energy Transfer LLC Rover Pipeline project (the "ET Rover Pipeline") that it will assign to AM in connection with the completion of this offering.
Antero also has a right to participate for up to a 15% non-operating equity interest in an unnamed 50-mile regional gathering pipeline extension (the "Regional Gathering System") that will expire six months following the date on which the Regional Gathering System is placed into service, which is currently scheduled to occur during the fourth quarter of 2015.
Antero intends to assign this option to AM in connection with the completion of this offering. In addition, AM has entered into a right-of-first-offer agreement with Antero to allow for AM to provide Antero with natural gas processing services in the future.
Competition
As a result of its relationship with Antero, AM does not compete for the portion of Antero's existing operations for which AM currently provides midstream services and will not compete for future portions of Antero's operations that will be dedicated to AM pursuant to its gathering and compression agreement with Antero.
However, AM will face competition in attracting third-party volumes to its gathering and compression systems. In addition, these third parties may develop their own gathering and compression systems in lieu of employing AM’s assets.
5% Shareholders pre-IPO
The parent owns the remaining limited partnership and general partnership interests.
Dividends
The board of directors of AM’s general partner will adopt a cash distribution policy pursuant to which AM intends to distribute at least the minimum quarterly distribution of $0.17 per unit ($0.68 per unit on an annualized basis) on all of its units to the extent AM has sufficient cash after the establishment of cash reserves and the payment of its expenses, including payments to its general partner and its affiliates.
That’s a projected yield of 3.4% for the 12 months ending Sept ’15.
Furthermore, AM expects that if it is successful in executing its business strategy, AM will grow its business in a steady and sustainable manner and distribute to its unitholders a portion of any increase in its cash available for distribution resulting from such growth.
Use of Proceeds
AM expects to receive $709 million from its IPO and use it for the following:
to pay $1.0 million of financing costs in connection with its new revolving credit facility, (ii) to repay in full $458.0 million of indebtedness that AM will assume from Antero in connection with the contribution of Midstream Operating to AM by Antero, which indebtedness was incurred by Antero to fund capital expenditures with respect to the Predecessor, and (iii) for general partnership purposes.
