Master limited partnership (“MLP”), CONE Midstream Partners LP CNNX recently announced a 3.6% increase in its quarterly cash distribution. The revised dividend of 27.24 cents per unit will be distributed on Feb 14, 2017 to unitholders of record as of Feb 6.
The latest hike marks an increase of 1.24 cents from the prior payout of 26 cents. The aforementioned increase in the quarterly dividend is attributable to CONE Midstream’s financial strength and consistently robust performance. The new annualized dividend amounts to $1.09 per unit, up from $1.04 paid earlier, resulting in a dividend yield of 4.53%.
It is the sixth consecutive quarter of consistent distribution increase adopted by CONE Midstream’s management. Notably, the company is a master limited partnership formed between CONSOL Energy Inc CNX and Noble Energy, Inc NBL. On Oct 31, 2016 both CONSOL Energy and Noble Energy jointly announced that they had entered into a definitive agreement to separate their upstream Joint Venture (JV).
Investment Plans & JV Separation
CONE Midstream Partners LP entered into a definitive agreement to acquire an additional 25% ownership interest in CONE Midstream DevCo I LP, commonly referred to as the “Anchor Systems”. The transaction is for a total purchase consideration of $248 million.
The Partnership currently owns a 75% interest in the Anchor Systems and acquisition of the remaining 25% ownership interest will increase the Partnership’s ownership share of the Anchor Systems to 100%. Thereby, helping the company in its long-term prospects and proving it to be accretive to the unitholders.
Moreover, the split of the upstream JV has potential upsides. The new arrangement will boost overall total drilling and production activity within the company’s dedicated acreage.
Further, these systematic investments of the company will also help it to boost its earnings in the long term and create an ample visibility regarding the earnings performance of the company.
Industry Outlook for 2017
Oil and Gas Production/ Pipeline industryhas seen the addition of a significant amount – several billions of cubic feet per day – of new natural gas processing capacity using state-of-the-art equipment. Given that the price of liquids is tied to oil, price is considered to be a bigger consideration than processing capacity, at this point.
As per an Energy Information Administration report, the U.S. crude oil production is projected to average 8.8 million barrels per day in 2017. Brent crude oil prices are expected to average $52 per barrel, which reflects an upward correction of nearly 21% from the 2016 levels, while West Texas Intermediate (WTI) crude oil prices are predicted to be an average $51 per barrel.