In a closely watched first day of trading on the stock market, shares of a subsidiary of EQT Corp.'s drilling business finished up more than 10 percent from its initial public offering price and seemed to take its parent company stock up with it.
The Downtown-based energy firm raised $262.5 million on Wednesday in offering 12.5 million common units of its EQT Midstream Partners LP subsidiary, a profitable unit that handles gas pipeline operations.
Trading under the ticker symbol EQM on the New York Stock Exchange, the subsidiary had an offering price of $21 per share and closed at $23.75. EQT Corp. stock, meanwhile, closed at $53.83, up $2.11, or 4 percent, after trading in the low $50 range for several days.
As more drillers tap domestic gas reserves, companies like EQT have found so-called midstream operations -- which compress, process and transport the extracted gas -- to be lucrative as the need for an energy infrastructure grows.
Plans to trade EQT Midstream as a separate entity have been known for some time, but the Wednesday offering took on a particular resonance for Wall Street. It was the first IPO in more than a month and investors have been wary since Facebook Inc.'s bungled debut in May was marred by technical difficulties and a first day that just barely broke even.
EQT Chief Executive Officer David Porges and other executives were on-hand to ring the Opening Bell at the exchange on Wednesday. EQT Midstream is a master limited partnership of the EQT Corp. parent company.
Six New York-based banks were joint managers for the offering.
EQT Midstream, while operating about 11,000 miles of gathering lines and more than 125 compressor stations nationwide, has been very good for its parent company recently.
Its first-quarter income of $56.1 million was up 10 percent from the year prior, even as operating income for the parent corporation dropped 30 percent.
EQT Midstream is currently at work on the Sunrise Project, which will involve building 45 miles of pipeline from southwestern Pennsylvania to northern West Virginia to service production in the region's Marcellus Shale natural gas formation.
The Salient Midstream & MLP Fund of Houston, Texas, a fund that invests specifically in midstream operations, priced its late May initial public offering at $20 per share.
Three more companies are expected to join EQT Midstream in breaking the IPO drought this week. Computer firms Exa Corp. and ServiceNow Inc., and biopharmaceutical firm Tesaro Inc. are the other so-called "icebreaker" deals hitting the trading floor in the coming days.
Erich Schwartzel: firstname.lastname@example.org or 412-263-1455.