Noble Midstream Boasts An Impressive Record Of Stability And Strength

Noble Midstream Partners LP NBLX has solid Permian potential and enjoys significant leverage to the development plans of its parent, Noble Energy, Inc. NBL, JPMorgan’s Jeremy Tonet said in a report. He initiated coverage of Noble Midstream with an Overweight rating and a price target of $34.

Solid Growth Potential

The company focuses on the Denver-Julesburg region, with 300,000 acres and more than 6,000 drilling locations. This represents “significant organic expansion opportunities,” analyst Tonet noted. He added that there was significant visibility into volume growth, especially given Noble Energy’s [Rated: Overweight] focus on developing its core acreage. Rapid volume growth is expected to drive multiple years of ~20 percent distribution growth.

Strong, Strategic Sponsor

Noble Energy, which has “an impressive record of stability and strength,” is likely to have formed Noble Midstream to have a “low cost of capital vehicle to fund infrastructure growth,” Tonet commented.

Noble Energy has a ~55 percent LP interest, the GP and the IDRs in Noble Midstream. “These interests strongly incentivize NBL to drive rapid growth at NBLX through supporting organic growth and providing attractive dropdowns. Moreover, NBL remains committed to a robust DJ development plan that depends upon rapid midstream build-out by NBLX,” the analyst wrote.

Tonet added that Noble Midstream has financial flexibility and cash flow stability, which support its attractive profile.

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