April 25, 2019 / 7:31 PM / in 2 months

Exclusive: Pipeline operator Noble Midstream Partners up for sale - sources

NEW YORK (Reuters) - Noble Midstream Partners LP, a pipeline operator controlled by U.S. oil and gas exploration and production company Noble Energy Inc, is up for sale, people familiar with the matter said on Thursday.

FILE PHOTO: Floor governor Peter Giacchi (C) gives a price for Noble Midstream Partners LP, during the company's IPO on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 15, 2016. REUTERS/Brendan McDermid/File Photo

The decision to seek to sell Noble Midstream Partners comes at a time when oil and gas companies are coming under intense pressure from shareholders to direct their focus on core operations to maximize returns and minimize expenses.

Noble Energy could also decide to sell some of the assets and not the whole company, four sources said, asking not to be identified because the matter is confidential. Noble Midstream Partners is structured as a tax-efficient master limited partnership.

Noble Energy and Noble Midstream Partners did not immediately respond to requests for comment.

Noble Midstream Partners shares rose 7 percent to $40.12 on the news, giving it a market value of about $1.6 billion.

Noble Midstream provides crude oil, natural gas, and water-related midstream services in the DJ Basin in Colorado and the Delaware Basin in Texas.

Noble Energy operates in the United States and offshore in the Eastern Mediterranean and off the west coast of Africa. It has a market capitalisation of $13 billion.

The master limited partnership model has fallen out of favour with the oil and gas industry in the last couple of years, as it often failed to meet its targeted returns, and corporate tax reform lessened its financial benefits.

Selling Noble Midstream Partners in its entirety would trigger a tax bill, meaning Noble Energy would only sell the whole company if the price is significant enough, according to two of the sources.

Pipeline companies can attract significant acquisition interest from private equity firms, infrastructure and pension funds, given the steady returns which they generate.

Private equity firm Blackstone Group LP announced in January it had agreed to buy a controlling stake in pipeline company Tallgrass Energy LP for $3.3 billion, while buyout firm ArcLight Capital Partners said last month it would purchase the stake it did not already own in American Midstream Partners.

Reporting by David French in New York; Editing by Sonya Hepinstall and Tom Brown

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