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Consol, Noble Drop NatGas Pipeline Assets to Cone Midstream After JV Split

Cone Midstream Partners LP said Wednesday it has agreed to acquire the remaining interest in  more than 125 miles of pipelines and 650 MMcf/d of natural gas compression capacity from sponsors Consol Energy Inc. and Noble Energy Inc. in a deal valued at $248 million.

Cone was formed by Consol and Noble in 2014 to gather production from a Marcellus Shale joint venture in Pennsylvania and West Virginia. The 50/50 JV was dissolved in October. The assets Cone is acquiring make up its anchor systems and the sponsors have agreed to drop down their remaining 25% interest following the JV split.

When the transaction closes, which is expected by the end of the year, Consol and Noble would each receive $70 million in cash and 2.6 million common units in Cone Midstream. Cone said in a regulatory filing that it plans to fund the cash portion of the transaction with debt.

Once completed, Noble and Consol would each hold 34.2% of Cone. Consol and Noble split the E&P JV to gain more control over the development pace of the assets. Consol took a 100% interest in 306,000 Marcellus acres mostly in Pennsylvania, while Noble took 363,000 Marcellus acres primarily in West Virginia.

Consol has been moving away from coal production in recent years to a pure-play exploration and production company focused on the Appalachian Basin, while Noble has been more focused on the Permian Basin's Delaware sub-basin, Colorado's Denver-Julesburg Basin and the Eagle Ford Shale in Texas.

Financial analysts noted that the transaction helps in Consol's transition to a pure-play gas producer and further aids its efforts to delever the balance sheet. 

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