Pipeline Partner Antero Midstream announces $875 million IPO

Brace yourselves investors. The Antero Midstream GP IPO (Pending: AMGP), set to take place this coming week, will be among the largest to hit the 2017 stock market in April. Antero Midstream is a Denver, Colorado-based US company that deals with pipeline transport in the E&P industry.

Antero Midstream GP is a partner in the related firm Antero Resources Corporation (NYSE: AR). Antero Midstream partnered with the Corporation to form the Antero Midstream Partners LP (NYSE: AM). The firms work together in production, with Antero Midstream GP providing the Resource Corporation with services such as gathering pipelines and compressor stations. The midstream also dabbles in a bit of processing and fractioning of plants, as well as water handling and treatment infrastructure to transport units of foil and natural gas throughout the southern resource-rich states. Antero Midstream GP’s main revenue stream is from the cash distribution it gets from the Resource Corporation’s subsidiary, Antero IDR Holdings, from which it receives 94%.

The terms for the company’s initial issuance, if met, will see it raise up to $875 million. The company plans to list 37.3 million of its common shares as part of the sale. Investors will be able to buy the shares for between $22 and $25 apiece. At the moment the public doesn’t know what the midstream’s market cap will be at midpoint post-IPO. Several underwriters will take part in the exercise, with Morgan Stanley and Barclays as the lead managers, and JP Morgan, Citi, Baird, Goldman Sachs, Wells Fargo Securities, Credit Suisse, Scotia Howard Weil, Tudor, Picketing, Holt & Co. and Evercore ISI participating among others.

Antero Midstream GP’s finances are in its favor ahead of the IPO. The cash distribution that the firm gets from the IDRs given by the subsidiary company is increasing over time. In just the first quarter of 2017, the transportation price per unit for The Appalachian midstream provider was $0.30; this represents a 28% elevation rate for the service when compared to the cost per unit for the same period in 2016. This increase is the ninth consecutive time that the price per unit delivered has risen in the past few years. If you’re an interested investor, then you should note that that represents a total sequential 7% increase for the midstream.

Added to the promising cash distribution business for Antero Midstream GP is the good news that the business is set to grow. That’s a good sign for the company’s planned expansion. The strategic placement of the company’s assets and partnerships has placed it in a prime position for growth. If the IPO lives up to its promise in revenue, Antero Midstream GP could be well on its way to achieving its vision. The company’s vision is that it may be the leading service provider in the Appalachian region.

The move of the midstream company is a positive one at a time. It’s also surprising given that firms in the oil and energy industries are not doing well in the stock markets. Just last week, water-providing E&P service provider Select Energy launched its public sale of shares. The IPO did badly, raising way less than it expected to.