Dominion Midstream Partners LP sets terms for $350 million IPO

Dominion Midstream Partners LP, which operates Dominion Resources' liquefied natural gas import, storage, regasification and transportation assets, announced terms for its IPO on Monday. The Richmond, VA-based company plans to raise $350 million by offering 17.5 million common units at a price range of $19 to $21. At the midpoint of the proposed range, Dominion Midstream Partners LP would command a fully diluted market value of $1.3 billion.

Dominion Midstream will control the Cove Point LNG Facility, a liquefied natural gas import/regasification and storage facility located on the Chesapeake Bay in Lusby, Maryland. It will also own approximately 136 miles of natural gas pipeline that connects Cove Point to interstate natural gas pipelines. The company is using IPO proceeds to develop a natural gas export/liquefaction facility, which should be in service by 2017. Parent Dominion Resources will own a 32% interest in Cove Point's operating LP. Dominion Midstream's customers include BP, Royal Dutch Shell and Statoil, and its three largest transportation and storage customers accounted for 94% of 2013 revenue (Statoil was 72%).

During the six months ended June 30, 2014, historical net revenue increased 2% to $172 million due to renegotiated import-related contracts. Its EBITDA fell 6% to $95 million ($25 million pro forma adjusted EBITDA) because of higher purchased gas costs and an increase in stakeholder outreach expenses for its Liquefaction Project. The majority of its services are under long-term contracts at Federal Energy Regulatory Commission-approved rates.

Dominion Midstream Partners LP, which was founded in 2014 and booked $254 million in sales for the 12 months ended June 30, 2014, plans to list on the NYSE under the symbol DM. Barclays, Citi, J.P. Morgan, BofA Merrill Lynch, Goldman Sachs, UBS and Morgan Stanley are the joint bookrunners on the deal. It is expected to price during the week of October 13, 2014.