Photo by: Bloomberg
TORONTO (miningweekly.com) – US fossil fuels producer Consol Energy on Thursday announced that it and Noble Energy – its joint venture partner in the Marcellus play of Pennsylvania and West Virginia – planned to form a master limited partnership (MLP) for midstream gathering services for production from their acreage.
The midstream gathering services involve the transportation, storage and wholesale marketing of crude or refined petroleum products, without which bottlenecks in production could occur.
In the US, an MLP is allowed only if it derives most of its cash flows from real estate, natural resources or commodities.
Consol and Noble had confidentially submitted to the US Securities and Exchange Commission a draft registration for an initial public offering of common units of the MLP, which iwas expected to be completed in the third quarter, if the partners decide it was warranted.
Consol was currently engrossed in a fundamental transformation of its business.
The fossil fuels producer had been the largest US bituminous coal producer for well over a century, until it shifted its focus in 2009 to the growing shale gas exploration and production (E&P) industry in the Appalachian basin.
Consol announced at the end of October 2013 that it would sell a significant part of its coal subsidiary Consolidation Coal Company, which held all five of its longwall coal mines in West Virginia, to Murray Energy Corp in a “transformative” $3.5-billion deal.
Most of Consol’s attention is now centred on the Marcellus shale, where it plans to spend $825-million in capital expenditure this year. The company also has interests in Ohio’s Utica shale, where it plans to spend $115-million this year, mostly in the core wet gas areas of Belmont, Guernsey, Harrison and Noble counties, the company revealed in a sizeable presentation on its E&P intentions, released during an analyst day on Thursday.