Just Happened: NiSource Analyst Day

I’m out of the office right now at a conference in Palm Beach, so I’ve been getting all my news remotely about the NiSource (NI) analyst day. I have to say, I’m bummed that I missed being with the other stat nerds at Alerian when we got news of another MLP filing an S-1 and the split of a diversified utility company into a pure utility and a pure energy infrastructure company.

NiSource announced the formation of an MLP yesterday, confirming longstanding rumors in the market. Columbia Pipeline Partners (anticipated ticker: CPPL) will own a minority interest in the following traditional MLP assets:

2014.09.30 Just Happened - CPPL

If you’re an investor who’s looking for an MLP focused on Marcellus and Utica infrastructure, this could be worth your research efforts. As wells in the Marcellus come online, the company expects to see increased throughput on its pipeline systems.

Shortly after CPPL is taken public, NiSource expects to split into two companies. The GP interest and IDRs of CPPL (as well as an LP stake in the MLP), together with the majority interest in those assets in the map above, will be owned by Columbia Pipeline Group (anticipated ticker: COLP).

2014.09.30 Just Happened - Slide 16

Over time, COLP does not plan to sell specific assets to CPPL, but rather additional stakes in the OpCo. As CPPL will only own a 15% interest in the OpCo when it is taken public, there is significant visibility to future distribution growth just from dropdowns. Additional growth is expected to come from organic growth projects at the OpCo:

2014.09.30 Just Happened - Slide 44

NiSource traded up almost 6% yesterday on heavy volume on the back of these two announcements (the COLP spinoff in particular, as it was not expected by most analysts). Not quite the 25%-plus pop that ONEOK Inc (OKE) got last year on the day of its announcement in the same vein, but I’m sure NiSource shareholders will take it nonetheless. If COLP is received well by the investor market next year, expect other Utilities with significant earnings contributions from midstream assets to explore a similar type of transaction.

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