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Shell Midstream IPO Could be Largest MLP Offering in Decade

Shell Midstream Partners LP on Wednesday debuted as one of the largest master limited partnership (MLP) initial public offerings in more than 10 years.

Royal Dutch Shell plc's MLP launch, priced on Tuesday at $19-21/share, opened at $23.00/unit and raised $920 million, well above expectations of $785 million, through the sale of 40 million shares (see Daily GPIOct. 20). The company was valued at $1.56 billion ahead of the launch.

In early Wednesday afternoon trading, the partnership was more than 44% higher at $33.19 on the New York Stock Exchange, and ended up closing the day at $33.55/share, up 46% from the opening.

MLPs, publicly traded entities, typically pay dividends and offer tax incentives for companies that extract or produce natural resources. More than a dozen MLPs are public or plan to go public this year.

Shell Midstream Partners, trading under "SHLX," owns stakes in onshore pipeline systems in Louisiana, Texas and Mississippi, as well as the Gulf of Mexico. Pipeline system interests include Zydeco Pipeline Co., Mars Oil Pipeline Co. and Bengal Pipeline Co. LLC and Colonial Pipeline Co.

Zydeco include the Houston-to-Houma, LA (Ho-Ho) system; Mars is a major corridor crude oil pipeline that originates about 130 miles offshore in the deepwater Mississippi Canyon area, including the Olympus platform, and the Medusa and Ursa pipelines, and from the Green Canyon and Walker Ridge areas via the Amberjack pipeline connection.

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