IPOs

Bakken Shale MLP Launches $232M IPO

Hess Midstream Partners plans to offer 22.5% of the company to the public at an expected price of between $19 and $21 per common unit.
Matthew HellerMarch 27, 2017
Bakken Shale MLP Launches $232M IPO

Hess Midstream Partners, a joint venture between Hess Corp. and Global Infrastructure Partners (GIP) that provides pipeline, storage and other energy services in the North Dakota Bakken, is finally launching its initial public offering.

In a regulatory filing, Hess Midstream said it would offer 12.5 million common units, or about 22.5% of the company, at an expected price of between $19.00 and $21.00 per unit.

At the midpoint of $20 per common unit, the offering would raise net proceeds of $231.9 million, or $267 million if underwriters exercise a 30-day option to purchase an additional 1.87 million units. Hess Midstream would command a market valuation of $1.1 billion.

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The master limited partnership was initially formed by Hess in 2014 to own, operate, develop and acquire a diverse set of midstream assets to provide services to Hess and third-party oil and natural gas producers. In mid-2015, Hess contributed certain of its existing midstream assets in the Bakken to Hess Infrastructure Partners, a midstream energy joint venture in which GIP purchased a 50% ownership interest for approximately $2.675 billion.

Hess Midstream first filed a registration statement for an IPO in 2014. In 2016, it had revenues of $509.8 million, net income of $206.3 million and adjusted EBITDA of $306.0 million.

From the proceeds of the offering, the company expects to distribute about $218.1 million to Hess Corp. and GIP, retain about $10 million to fund expansion capital expenditures and working capital needs, and use $3.8 million to pay revolving credit facility origination fees.

“Our midstream infrastructure footprint services Hess’s leading acreage position in the Bakken, which includes more than 2,850 future operated drilling locations and represented approximately 33% of Hess’s average global production for the year ended Dec. 31, 2016,” Hess Midstream said in its prospectus.

“We believe our volumes and investment opportunities will continue to expand as Hess drills new wells in the Bakken,” it added.

Hess Midstream’s assets include a natural gas processing plant in Tioga, N.D., and a storage terminal in Mentor, Minn.