By Corrie Driebusch
Shares of Rice Midstream Partners LP, a master limited
partnership spun out of Rice Energy, opened at $15.79, 4.3% below
their initial public offering price Wednesday.
The stock recently traded at $16.17 on the New York Stock
Exchange, 2% below its IPO price of $16.50 a share.
The deal raised $412.5 million by selling 25 million shares,
before taking into account the overallotment option, which gives
underwriters the opportunity to sell additional shares under
certain circumstances. The company had been looking to sell 25
million shares in the range of $19 to $21 a share, according to a
regulatory filing.
Rice Midstream operates midstream assets in the Appalachian
Basin, and its revenues come from natural-gas gathering services
and compression services. Natural-gas futures have declined in
recent weeks, though their declines are nothing like the hit the
price of crude oil has taken.
MLPs, publicly traded entities that don't pay corporate-income
taxes, pass the majority of their income to shareholders. This year
investors have poured money into newly issued MLPs, drawn by the
reputation of the partnerships for stable, high payouts and as a
way to benefit from the natural gas and energy infrastructure boom
taking place in the U.S.
However, even though most MLPs earn money by charging
oil-and-gas producers to transport or store their products and have
relatively little direct commodity price exposure, the sector has
been hit in recent trading sessions as the price of oil has
tumbled.
The NYSE Alerian MLP index is down nearly 12% so far this month
as of Tuesday's market close, putting it well into negative
territory for the year.
The Rice Midstream deal was led by Barclays, Citigroup, Wells
Fargo Securities, Goldman Sachs and RBC Capital Markets.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
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