CNX Sells WV Gathering System to Former CONE Midstream for $265M

CNX Resources, in addition to issuing an announcement about proved reserves yesterday (see today’s companion story), also issued an announcement about CNX the drilling company selling its Shirley-Pennsboro gathering system in West Virginia to CNX the pipeline company (CNX Midstream) for $265 million. Yes, in a sense it is moving assets around on paper. However, this seemingly innocuous announcement is interesting to MDN for a couple of reasons. First, there is a trend of splitting companies apart–to spin out the pipeline/midstream stuff into its own standalone company, separate from the drilling part of the company. EQT, a major CNX competitor, is going through the process of evaluating whether or not to spin off their pipeline subsidiary into its own company (see EQT Begins Process of Separating Midstream…into New Company?). When we see moves like this from CNX, we wonder if they too are also preparing for such a split. We have no evidence that such a move is in the cards–just idle speculation on our part. However, the fact that CNX is moving pipeline assets into the midstream subsidiary certainly sets up the possibility that the pipeline subsidiary may (one day) become a standalone company. Second, the pipeline subsidiary is called CNX Midstream. That’s a new name. As of early January you would have known it as CONE Midstream. CNX bought out its joint venture partner in CONE (Noble Energy) late last year and now owns all of CONE. CNX renamed CONE as CNX Midstream in early January (see CONE Midstream Gets a New Name: CNX Midstream Partners). We’ve not seen anyone else point out the fact that the former CONE is the buyer of this asset. For those two reasons–the trend of splitting drilling and pipelines into different companies, and the fact that CONE was the buyer–our interest was piqued in CNX’s seemingly innocuous announcement yesterday…
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CNX’s Pipelines to be Used for “Partners” – Not Just CNX Res.

Yesterday we brought you the news that CONE Midstream has been renamed to CNX Midstream, and that CNX Resources is now the sole owner of the entire gathering pipeline system (see CONE Midstream Gets a New Name: CNX Midstream Partners). CONE was originally a joint venture between CONSOL Energy (the “CO” part of the name) and Noble Energy (the “NE” part of the name). CONSOL and Noble had a joint venture on hundreds of thousands of Marcellus/Utica Shale acres. Some of the wells drilled were “owned” by CONSOL, some by Noble. CONSOL and Noble decided to divide up the JV, each taking a piece, in late 2016 (see Divorce: CONSOL & Noble Dissolve M-U Joint Venture). Then in May 2017, Noble up and sold all of their Marcellus leases and wells, to HG Energy (see Noble Energy Sells Remaining M-U Assets for $1.2B – Who Bought?). Not long after, Noble announced they also want to sell their share of CONE. Long story short, CNX (formerly CONSOL) bought Noble’s CONE share, and now owns it lock, stock and barrel. Does that mean CNX will no longer flow gas from HG Energy (formerly Noble) wells served by their 100%-owned pipelines? Not on your life! CNX will continue to service HG Energy’s wells, and may even run gathering lines to other competitors’ wells (i.e. “partners”) in the areas where CNX Midstream operates. So said CNX CEO Nick DeIuliis on a conference call yesterday with analysts. DeIuliis is jazzed that his company now owns 100% of the pipeline gathering system because it will allow them to “move quickly” to seize opportunities…
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CONE Midstream Gets a New Name: CNX Midstream Partners

CONE Midstream is, or rather was, a pipeline joint venture between CONSOL Energy and Noble Energy (“CO” from CONSOL and “NE” from Noble Energy), formed in the summer of 2014 to service wells drilled as part of CONSOL & Noble’s drilling joint venture (see CONSOL & Noble Energy Form New Marcellus Midstream Company). Following Noble’s exit from the Marcellus last year, they began to shop their 50% share of CONE, and thought they had found a buyer in Quantum Energy Partners–for $765 million. However, as we reported in December, that deal hit a snag (see Noble’s 50% CONE Midstream Sale in Trouble – Shopping Deal to CNX). Not long after, CNX Resources (formerly CONSOL Energy) issued a press release to announce they had cut a deal to buy Noble’s 50% CONE share–for $305 million, which is 60% less than of the deal price Noble previously worked out with Quantum (see CNX to Buy Noble’s 50% Share of CONE Midstream for $305M). Two bits of news to share with you regarding the CONE deal: (1) the deal is now done, and (2) CNX Resources has renamed CONE Midstream to be CNX Midstream–which should not be a surprise since the NE part of CONE is now gone, and since the CO part changed its name. Here’s the news…
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CNX to Buy Noble’s 50% Share of CONE Midstream for $305M

On Monday MDN shared news with you that we believe was exclusive news–nobody else picked up on it. The news was that Noble Energy’s original plan to sell its 50% stake in CONE Midstream to Quantum Energy Partners for $765 million, announced back in May, is in trouble (see Noble’s 50% CONE Midstream Sale in Trouble – Shopping Deal to CNX). We told you that according to a recent Securities and Exchange Commission filing Noble had begun negotiations with CNX Resources (formerly CONSOL Energy), which is the other 50% owner of CONE, to sell Noble’s share to them. It seems we were prophetic. This morning CNX issued a press release to announce they have cut a deal to buy Noble’s 50% CONE share–for $305 million. That’s 40% of the deal price Noble previously worked out with Quantum. Must be it’s a buyer’s market for midstream assets…

12/18/17 Update: On Friday, following CNX’s announcement about buying the rest of CONE from Noble Energy, Noble also issued an announcement (below). Noble’s announcement amusingly leaves out the purchase price–less than half of the previously deal they had with Quantum.
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Noble’s 50% CONE Midstream Sale in Trouble – Shopping Deal to CNX

In May MDN brought you the news that Noble Energy dropped a bombshell, selling its 100% interest in 385,000 Marcellus/Utica acres and wells producing 415 million cubic feet equivalent of natural gas in West Virginia and Pennsylvania for $1.225 billion to HG Energy (see Noble Energy Sells Remaining M-U Assets for $1.2B – Who Bought?). A couple of weeks later the other shoe dropped when Noble announced they would sell their 50% stake in CONE Midstream, a 50/50 joint venture with CONSOL Energy (now CNX Resources), to Quantum Energy Partners for $765 million, meaning a total exit for Noble from our region (see Noble/CONSOL Breakup Continues: Noble Sells 50% of CONE Midstream). When we say Noble “sold” their CONE stake we mean “will be sold after all the lawyers and bean counters get done with drawing up the necessary paperwork.” Fact is, the CONE sale has still not happened, even though there is a Dec. 31 deadline for the deal to be completed. It appears Noble’s deal to sell it’s CONE stake to Quantum is now in jeopardy. We base that observation on information from a filing Noble made with the Securities and Exchange Commission last week. In an 8-K filing, Noble said (a) they’ve extended the deadline to complete the deal to sell CONE to Quantum from Dec. 31, 2017 to June 30, 2018, and (b) Noble has opened up discussions/negotiations with CNX to sell their half of CONE to CNX instead of selling it to Quantum–which would make CNX the 100% owner of CONE…
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Noble/CONSOL Breakup Continues: Noble Sells 50% of CONE Midstream

Noble Energy dropped a bombshell that it has sold its 100% interest in 385,000 Marcellus/Utica acres and wells producing 415 million cubic feet equivalent of natural gas in West Virginia and Pennsylvania for $1.225 billion to “an undisclosed buyer” (see Noble Energy Sells Remaining M-U Assets for $1.2B – Who Bought?). MDN exclusively shared the news of exactly the who the “undisclosed buyer” is: HG Energy (headquartered in Parkersburg, WV), backed with money from investment firm Quantum Energy Partners. HG is a “portfolio company” of Quantum. The press release announcing the acreage/asset sale went to great lengths to stress that Noble’s half operating interest in the CONE Midstream pipeline gathering system was not part of the deal. CONE is a 50/50 joint venture between CONSOL Energy (the “CO” part of the name), and Nobel Energy (the “NE” part of the name). CONE was Noble’s final connection to our region. No more. Yesterday, Noble Energy announced they’ve sold their 50% stake in CONE to Quantum Energy Partners for $765 million. This time Noble went ahead and announced the buyer, perhaps figuring MDN would find out and blab it any ;-). Here’s the announcement that Noble Energy has left the Marcellus/Utica building…
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CONE Midstream 2016 – Profits Up, Volumes Up, Looking Good

CONE Midstream, a joint venture between CONSOL Energy and Noble Energy (CO from CONSOL and NE from Noble Energy) was formed in summer 2014 (see CONSOL & Noble Energy Form New Marcellus Midstream Company). CONE Midstream has been a small but stellar performer in the midstream (pipeline) sector. Although it’s been almost a month since they released their fourth quarter and full year 2016 update, we thought it important to highlight the latest from CONE. Once again, as with previous quarterly (and annual) updates, CONE continues to impress. For all of 2016, CONE made a $96 million profit, up from making $71 million in 2015. They report flowing an average of 933 million cubic feet per day (MMcf/d) of gas through the system in 4Q16, up from an average of 760 MMcf/d in 4Q15. Below is the February update, along with the latest PowerPoint slide deck, the company’s 10-K filing with the SEC, and excerpts from their 2016 earnings call…
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Assets Reshuffled at CONE Midstream/CONE Gathering

clear-as-mudCompanies in the oil and gas sector often split the ownership of assets into different companies (on paper) for various reasons: tax purposes…to attract investment…to give us laypeople headaches. CONE Midstream, a joint venture between CONSOL Energy and Noble Energy (CO from CONSOL and NE from Noble Energy) was formed in summer 2014 (see CONSOL & Noble Energy Form New Marcellus Midstream Company). CONE Midstream has been a small but stellar performer in the midstream (pipeline) sector, as evidenced by their most recent quarterly update (see CONE Midstream 3Q16: Success Story Continues). But before there was CONE Midstream, there was CONE Gathering (see New Pipeline, Wells Coming to Upshur & Barbour Counties in WV). There is also CONE Midstream DevCo, yet another entity on paper. Is your head spinning yet? CONSOL and Noble yesterday announced that, well, we’re not quite sure what was announced! It appears that the two CONE Midstreams and CONE Gathering are reshuffling the deck once again–transferring some of the assets held between them to the other entities. If you can figure it out, please let us know. Here’s what CONSOL and Noble said in a joint announcement yesterday…
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CONE Midstream 3Q16: Success Story Continues

CONE logoCONE Midstream, a joint venture between CONSOL Energy and Noble Energy (get it? CO from CONSOL and NE from Noble Energy) was formed in summer 2014 (see CONSOL & Noble Energy Form New Marcellus Midstream Company). When CONE released their 1Q16 update, we pointed out what a gem of a midstream (i.e. pipeline) company it is (see CONE Midstream 1Q16: Profits Up, Volumes Up, Looking Great!). In 2Q16 the company continued its winning ways (see Cone Midstream Continues to Impress – 2Q16 Update). What about in 3Q16? Net income was up ($23.6 million in 3Q16 vs. $19.7 million in 3Q15), and average daily volumes flowing through the pipeline was up (840 billion Btus per day in 3Q16 vs. 642 BBtu/d in 3Q15). Here’s the latest from the midstream gem in the Marcellus…
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CONSOL Fined $184K for Sloppy Pipeline Construction

finedThe Pennsylvania Department of Environmental Protection (DEP) has fined two CONSOL Energy subsidiaries, CNX Gas (the drilling division) and CONE Midstream (co-owned by CONSOL and Noble Energy) for coloring outside the lines when they built some gathering pipelines in four western Pennsylvania counties. CNX was fined $139,000 and CONE was fined $45,000 for veering off the path officially filed with the DEP. According to DEP spokesman John Poister, the numskulls didn’t pay attention and were sloppy (our words, his sentiment). Here’s the official announcement from the DEP, along with comments from Poister…
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Cone Midstream Continues to Impress – 2Q16 Update

CONE logoCONE Midstream, a joint venture between CONSOL Energy and Noble Energy (get it? CO from CONSOL and NE from Noble Energy) was formed in summer 2014 (see CONSOL & Noble Energy Form New Marcellus Midstream Company). When CONE released their 1Q16 update, we pointed out what a gem of a midstream (i.e. pipeline) company it is (see CONE Midstream 1Q16: Profits Up, Volumes Up, Looking Great!). CONE has just released their 2Q16 update and once again shows a company with strong financial performance. Yes, net income went down ever so slightly from 2Q15 ($24.5 million in 2Q16 vs. $24.9 million in 2Q15), but overall the company continues to do great…
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CONE Midstream 1Q16: Profits Up, Volumes Up, Looking Great!

CONE logoCONE Midstream, a joint venture between CONSOL Energy and Noble Energy (get it? CO from CONSOL and NE from Noble Energy) was formed in summer 2014 (see CONSOL & Noble Energy Form New Marcellus Midstream Company). Last week CONE released its first quarter 2016 update. This gem of a midstream company continues to grow and impress. In 1Q16 CONE had $24.8 million in net income compared to $14.2 million for 1Q15 (up an astonishing 75%). During 1Q16 CONE flowed an average of 850 million cubic feet per day (Mmcf/d) of gas through its system, vs. 549 Mmcf/d in 1Q15. Keep an eye on CONE! Below we have the update, along with comments from CONE CEO John Lewis and a copy of their latest PowerPoint slide deck…
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CONE Midstream 2015: Operates in the Black, No Losses

Perhaps the smaller the better when it comes to midstream companies. Today we shared with you the news that Williams, perhaps the largest midstream company operating in the Marcellus/Utica, lost $1.6 billion in fourth quarter 2015 and lost $1.4 billion for full year 2015 (see our companion story). However, for one of the smallest midstream companies operating in our neck of the woods, CONE Midstream, the opposite was true. Yesterday CONE, a joint venture between CONSOL Energy and Noble Energy, released their financials for fourth quarter and full year 2015. Not a loss in sight on their income statement. Granted, compared to Williams, CONE is tiny, but hey, maybe the mighty Williams can learn a thing or two about operating in the black from CONE. Here’s the CONE update issued yesterday…
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CONE Midstream 3Q15: Continued Pipe Expansion in West Virginia

CONE Midstream is a joint venture between CONSOL Energy (the CO in CONE) and Noble Energy (the NE in CONE), formed in August 2014 (see CONSOL & Noble Energy Form New Marcellus Midstream Company). Yesterday CONE issued their third quarter 2015 update. While CONE touted their exponential growth in the volume of gas flowing through their system earlier this year (see CONE Midstream’s Strong Beginning, Hits 500 Mmcf/d 6 Mos Early), there was no mention of current or predicted future flow volumes in the update, nor in the investors conference call. Although there was one vague reference that we found. The 3Q15 update (below) provides the financials for the company and does mention where they have been spending money to expand their system–mainly in West Virginia. Here’s the low down…
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CONE Midstream 2Q15: Revenue & Net Inc. Almost Double

CONE Midstream, the pipeline joint venture between CONSOL Energy and Noble Energy, is a small but growing company. Yesterday’s second quarter 2015 update shows both revenue and net income for the company just about doubled year over year between 2Q14 and 2Q15. Below is the good news update from CONE, with details about their expansion projects in southwestern PA and the northern panhandle of WV…
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CONE Midstream Looking to Add Customers Beyond CONSOL & Noble

In August 2014, CONSOL Energy and Noble Energy formed a midstream joint venture called CONE Midstream to connect their Marcellus and Utica wells (see CONSOL & Noble Energy Form New Marcellus Midstream Company). By February of this year, CONE had already flown by the 500 million cubic feet per day of of throughput (see CONE Midstream’s Strong Beginning, Hits 500 Mmcf/d 6 Mos Early). CONE issued their first quarter 2015 update on Monday. Management also held an earnings call and on that call upper management stated they are now looking to open up their pipelines to flow gas for other companies. CONE CEO John Lewis said so far CONE has two customers: CONSOL Energy and Noble Energy. Lewis said they’re looking at taking on new customers as well as looking at possibly buying other pipelines already in place to add to their network…
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