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UPDATE 2-Shell launches U.S. pipeline IPO

Wed, 18th Jun 2014 15:49

* Shell Midstream Partners LP files to raise up to $750million

* Intends to list units on NYSE under the symbol "SHLX"

* Offering expected in the second half of this year (Adds details on MLP assets, background)

By Swetha Gopinath

June 18 (Reuters) - Royal Dutch Shell Plc said itwould spin off some of its U.S. pipelines into a master limitedpartnership (MLP) and take it public, becoming the first of theindustry majors to use such a structure to monetize assets.

Shell Midstream Partners LP filed with U.S. regulators onWednesday to raise up to $750 million in an initial publicoffering of common units.

Companies holding midstream assets, such as pipelines andstorage facilities, and structured as MLPs have found favor withinvestors as they distribute most of their earnings toshareholders.

The listing of two MLPs, PBF Logistics LP andGasLog Partners LP, in May stood out in a lacklusterIPO market.

Shell Midstream, which owns stakes in four onshore andoffshore pipelines in Texas and Louisiana, said in its IPOprospectus that it plans to use proceeds from the offering toacquire stakes in Shell's other pipelines.

Shell, like other big oil companies, is facing increasingpressure from investors to cut soaring costs and raiseshareholder returns via dividends and share buybacks.

The company's plan to spin off its pipeline assets comes aday after it launched a sale of most of its stake in Australia'sWoodside Petroleum Ltd. It plans to shed $15 billion ofassets by the end of next year.

"As all of the majors have significant midstream assets, andas they have a tendency to mimic one another's strategy attimes, it will be interesting to see if the other majors beginto follow Shell's lead on this front," Simmons & Co analystswrote in a note.

Shell Midstream's assets include a 43 percent stake in acrude oil pipeline connecting Houston in Texas to Houma inLouisiana, a 28.6 percent stake in a pipeline to the offshoreMars field in the Gulf of Mexico and a 49 percent stake in arefined products pipeline linked to four Louisiana refineries.

Shell Midstream reported net income of $23.8 million onrevenue of $36.1 million for the quarter ended March 31, on apro forma basis, according to the IPO filing.

Barclays and Citigroup are underwriting the IPO, theHouston, Texas-based company said in its filing with the U.SSecurities and Exchange Commission. (http://bit.ly/1iG7z6c)

The filing did not reveal how many shares the companyplanned to sell or their expected price for the offering, whichis expected in the second half of the year.

The company said it intends to list its common units on theNew York Stock Exchange under the symbol "SHLX".

The amount of money a company says it plans to raise in itsfirst IPO filing is used to calculate registration fees. Thefinal size of the IPO could be different.

Shell's U.S.-listed shares were up 1.3 percent at$81.48 in late morning trading. (Additional reporting by Amrutha Gayathri; Editing by SaumyadebChakrabarty)

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