PITTSBURGH, Jan. 3, 2018 /PRNewswire/ — CNX Resources Corporation (NYSE: CNX) (“CNX”) and CNX Midstream Partners LP (NYSE: CNXM) (“CNXM”) jointly announced today that CNX has closed its previously announced acquisition of Noble Energy, Inc.’s (NYSE: NBL) (“Noble”) 50% membership interest in CONE Gathering LLC, which holds the general partner interest and incentive distribution rights in CONE Midstream Partners LP. In conjunction with the closing, CONE Midstream Partners LP was renamed CNX Midstream Partners LP and will commence trading on the New York Stock Exchange under the ticker “CNXM” effective January 4, 2018.
Separately, CNXM announced today that its board of directors, following prior approval by the Board of Director’s Conflicts Committee, which consists entirely of independent directors, has authorized CNXM to enter into an amendment to its gas gathering agreement (the “GGA”) with CNX Gas Company LLC, a wholly-owned subsidiary of CNX. As part of the amendment to the GGA:
- CNX will dedicate approximately 63,000 dry Utica acres to CNXM, of which approximately 51,000 will be located in the development company I, or DevCo I, area, which is 100% owned by CNXM.
- CNX has provided a minimum well commitment of 140 wells over the next four years in the DevCo I area that provides CNXM with downside protection and continued cash flows to support distribution growth.
- CNXM has agreed to a major system expansion to support production from the newly dedicated Utica areas.
This amendment is expected to help CNX unlock the stacked pay potential of the core of southwest Pennsylvania and capitalize on economies of scale, which would support accelerating drilling activity and production moving forward. CNXM believes this will result in a higher level of confidence to support sustainable distribution growth into the future, which in turn will benefit CNX, which owns 21.7 million common units, the general partner interest, and the incentive distribution rights in CNXM. In addition, CNX and Noble have agreed to divide equitably their jointly owned water assets so that either CNX or Noble will own all of the formerly jointly owned water assets within agreed upon areas.
“Owning 100% of the general partner of CNXM, while simultaneously amending the existing GGA, is very significant for CNX,” commented Nicholas J. DeIuliis, president and CEO. “CNX will benefit from increased control and flexibility with respect to the scope and timing of midstream development, which in turn will give CNX a greater level of optionality in its development plans and future drop opportunities. Ultimately, this GGA allows CNX to lock in our multi-year development plan under mutually beneficial terms for both CNX and CNXM. The single sponsor MLP model is the first key step in unlocking the value potential of CNX Midstream.”
“For CNXM,” Mr. DeIuliis said, “the amended GGA is expected to lock in distributable cash flow growth, enabling CNXM to maintain its strong distribution growth policy for the next several years.”
As part of the change in ownership, effective immediately, Nicholas J. DeIuliis will serve as the chief executive officer (CEO) of CNXM, in addition to his current role as president and CEO of CNX. Also, effective immediately, Donald W. Rush will serve as the chief financial officer (CFO) of CNXM in addition to his current role as CFO of CNX.
Following the closing of the acquisition, Nicholas J. DeIuliis, Donald W. Rush, and Timothy C. Dugan will join Stephen W. Johnson and the three existing independent directors to constitute the board of directors of CNXM.
The changes to CNXM’s management team and board of directors illustrate CNX’s intent to better align the strategic initiatives of CNX and CNXM to unlock the growth potential for both companies.
Goldman Sachs & Co. LLC served as the financial advisor and Latham & Watkins LLP served as the legal advisor to CNX. The conflicts committee was advised by Evercore on financial matters and Baker Botts L.L.P. on legal matters.