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New MLP Creation to Boost CONSOL and Noble

Paul Ausick

CONSOL Energy Inc. (CNX) announced Thursday morning that it will join with its partner Noble Energy Inc. (NBL) to form a master limited partnership (MLP) that will provide midstream gathering services for the two companies' jointly owned assets in the Marcellus Shale play. Each of the partners has filed a confidential Form S-1 with the U.S. Securities and Exchange Commission.

According to the announcement, the new MLP is expected to hold an initial public offering (IPO) late in the third quarter or early in the fourth quarter of this year. CONSOL and Noble will control the new MLP's general partner, which will own the incentive distribution rights and the majority of limited partner interests (common units) of the company. CONSOL notes however:

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Whether CONSOL Energy and Noble Energy proceed with an initial public offering of an MLP is subject to a number of factors, including the approval of Noble Energy and market conditions, and there can be no assurance that there will be an initial public offering of the MLP or any other transaction.

In 2011 Noble paid $1.07 billion for a 50% stake in 663,000 acres of CONSOL's holdings in the Marcellus Shale and agreed to pay another $2.13 billion in drilling and completion costs over a period of eight years.

CONSOL changed its focus from coal to natural gas in late 2012, and after posting a multiyear low of $26.25 in July 2013, shares have risen 77%. In the same time period, the share price of Peabody Energy Corp. (BTU) has risen about 11% while Arch Coal Inc. (ACI) is down about 3% and Alpha Resources Inc. (ANR) is down more than 30%.

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Shares of CONSOL traded up about 2.3% in Thursday's premarket, at $47.70 in a 52-week range of $26.25 to $48.30.

Noble shares were up about 0.8%, at $76.00 in a 52-week range of $56.92 to $78.01.

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