May 4, 2017 / 1:11 AM / 2 years ago

Antero Midstream GP raises $875 million in U.S. IPO

(Reuters) - Antero Midstream GP LP, a partial owner of Antero Resources Corp’s (AR.N) pipeline business, said on Wednesday it raised $875 million in an initial public offering (IPO).

Antero is the largest midstream IPO of the last two years, as oil price volatility and pushback against new pipeline projects have driven down listing activity.

Antero Resources is the second-largest natural gas and largest natural gas liquids (NGL) producer in Appalachian region and the eighth-largest natural gas producer in North America, based on fourth-quarter 2016 production volumes, according to the IPO prospectus.

Antero Midstream GP will begin trading on Thursday on the New York Stock Exchange under the symbol “AMGP” after pricing 37.3 million shares at $23.50, it said in a statement. The previously indicated price range had been given as $22 to $25.

The IPO was in stark contrast to another oil and gas IPO expected to complete Wednesday night. Fracker Liberty Oilfield Services delayed pricing by a day and slashed the prospective number of shares being sold and the price range to combat weak investor demand.

Oil service companies such as Liberty have proven less able to take advantage of the rebound in oil prices, with their profitability subdued because the oil producers, who they rely on for work, continue to focus on cost cutting.

Midstream companies, meanwhile, have proven quicker to feel the benefits. The only other midstream-related offering in 2017 - Hess Midstream Partners (HESM.N) - continues to trade above it offer price.


A drop in oil prices from mid-2014 had led oil explorers to cut back on investment in drilling, curtailing the need for new midstream infrastructure.

In addition, former President Barack Obama pushed back against two high profile pipeline projects, the $3.8 billion Dakota Access Pipeline and TransCanada Corp’s (TRP.TO) C$8 billion ($5.83 billion) Keystone XL project.

Proceeds from IPOs of master limited partnerships (MLPs), the structure used by most energy firms to house their midstream assets that ship and store oil and gas, dropped to $323 million last year from $4.9 billion in 2015, according to Thomson Reuters data.

The election of U.S. President Donald Trump with promises of significant infrastructure investment and support for both projects, as well as the recovering in oil prices from their 2016 nadir, has bolstered the pipelines sector.

Shares of midstream MLPs such as Valero Energy Partners LP VLP.N and Phillips 66 Partners LP (PSXP.N) have risen steadily since Trump’s Nov. 8 election, as much as 26 percent and 33 percent respectively.

Investment banks Morgan Stanley, Barclays and J.P. Morgan are the lead IPO underwriters.

($1 = 1.3728 Canadian dollars)

Reporting by Lauren Hirsch and David French in New York; Editing by Sandra Maler and Lisa Shumaker

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