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How Does Noble Midstream Add Value to Noble Energy?

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Updated

Midstream update

Noble Energy (NBL) generated $245 million from its first dropdown to Noble Midstream Partners (NBLX) earlier in June 2017. 

The company sold a 15% interest in Blanco River DevCo in the Delaware Basin and a 20% interest in Colorado River DevCo in the DJ Basin.

To date, the company has received $556 million from IPO (initial public offering) proceeds, distributions, and proceeds from the dropdown. As the graph above notes, cash flow distributions from NBLX to NBL are expected to rise at a compound annual growth rate of ~40% in the coming years.

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At the time of the IPO, NBLX’s assets were focused in the DJ Basin, and they consisted of crude oil, natural gas, and water-related midstream assets. Other MLP players in the DJ Basin include Western Gas Partners (WES) and DCP Midstream Partners (DPM). These companies make up 5.5% of the Alerian MLP ETF (AMLP).

Following the acquisition of the Advantage Pipeline crude oil system, NBL was able to expand its Delaware business as part of a joint venture with Plains All American Pipeline (PAA). NBL has now dedicated its Delaware acreage to Noble Midstream Partners.

According to NBL’s management in the company’s 1Q17 earnings conference, “A key to delivering our growth agenda is our Advantage midstream position, with Noble Midstream Partners operations aligned with the company’s U.S. onshore plan.”

Having looked at NBL’s key operational goals and performances, let’s now take a look at its financial performance.

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