Inergy LP said Tuesday it plans to spin off a minority interest in a new master limited partnership (MLP) as Inergy Midstream LP, which initially would own and operate the northeastern midstream natural gas storage and transportation business.

Assets expected to be included in the MLP are the Stagecoach natural gas storage facility and its lateral pipelines, the Steuben and Thomas Corners natural gas storage facilities, the Seneca Lake natural gas storage facility and its associated East and West pipelines, the Finger Lakes natural gas liquids storage facility and the proposed Marc I natural gas pipeline.

The MLP would have 41 Bcf of natural gas storage capacity and 825 MMcf/d of natural gas transportation capacity once the proposed Marc I pipeline and the North-South expansion projects are completed, Inergy stated.

“Our northeast midstream business continues to perform very well, and we are committed to achieving our long-term objectives for the Texas gas storage platform,” said CEO John Sherman. “In a challenging macroeconomic environment, we remain focused on executing our major initiatives in core midstream markets and positioning the partnership to deliver long-term value to our unitholders.”

The planned restructuring would lower future capital costs and enhance the ability to execute its growth strategy both internally and through strategic acquisitions, the Kansas City, MO-based company said. Inergy, which plans an initial public offering as soon as the end of this year, would use the cash proceeds to repay debt.

Inergy posted a fiscal third quarter loss of $35.5 million (minus 32 cents/unit), compared with profit of $12.4 million (6 cents) a year ago. Revenue jumped 33% in the latest period to $388.7 million on the strength of propane revenue, which was up 31% on a 1.5% volume increase. Operating and administrative expenses were nearly 3% higher in the quarter. Inergy said it typically reports a loss in its third quarter because of the seasonal nature of the propane industry.

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