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Cone Midstream Excites in Market Debut, But Vantage Pulls IPO

Cone Midstream Partners LP (CNNX), formed to own and develop natural gas gathering assets in the Marcellus Shale, captured investors' attention in its market debut on the New York Stock Exchange (NYSE) Thursday, climbing more than 38% from the opening bid.

The master limited partnership (MLP) was formed by Appalachian operators Noble Energy Inc. and Consol Energy Inc. to own and develop gas gathering assets in the Marcellus (see Shale Daily, Sept. 17).

Before the opening bell, CNNX raised $385 million by selling 17.5 million units at $22.00/unit, which was above initial expectations. Following heavy trading on a down day for the financial markets, CNXX closed Thursday up 38.17% at $30.40. More than 14 million units traded hands.

Unlike exploration and production (E&P) companies, which have underperformed of late because of lower commodity prices, MLPs offer unit holders dividends.

Meanwhile on Thursday, Vantage Energy Inc., an independent E&P that soon was expected also to debut on the NYSE, pulled its initial public offering (IPO), citing unfavorable market conditions.

The private equity-based operator, which operates in the Marcellus and Barnett shales and Utah's Uinta Basin, said it would "continue to evaluate the timing for the proposed offering as market conditions develop." The Englewood, CO-based operator filed for the IPO in July and set terms in mid-September to raise $601 million by offering 23.55 million total shares of stock priced at $24.00-27.00/share (see Shale Daily, Sept. 15).

Vantage is backed by Quantum Energy Partners, Riverstone Holdings and Lime Rock Partners, which together would own two-thirds of a stake post-IPO. Barclays Capital, Goldman Sachs, Citi, Credit Suisse, Tudor, Pickering, Holt & Co. (TPH) and Wells Fargo Securities were set to be the joint bookrunners on the deal.

TPH analysts said currently there is "negative sentiment" toward energy stocks, with commodity prices an "overarching concern." Although gas prices of late have been stronger, energy remains a "material laggard," and is "up about half as much as the broad stock market." The analysts aren't expecting the sentiment to "shift on a dime, but better value is emerging."

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