Seeking Alpha
Profile| Send Message|
( followers)

Niska Gas Storage Partners LLC (NYSE:NKA), a Delaware-based natural gas company, priced its IPO at $20.50 on May 11, within range.

Business Overview (from prospectus)

We are a Delaware limited liability company formed to own and operate natural gas storage assets. We own or contract for approximately 185.5 billion cubic feet, or Bcf, of total gas storage capacity. Our assets are located in key North American natural gas producing and consuming regions and are connected at strategic points on the gas transmission network, providing access to multiple end-use markets. Since our inception in 2006, we have organically added 41.3 Bcf of gas storage capacity through expansions, an increase of approximately 29%, at a total cost of approximately $131.0 million (an average of $3.2 million per Bcf). We are the largest independent owner and operator of natural gas storage assets in North America, based on our analysis of working gas capacity owned by other storage owners.

Offering: 17.5 million shares at $20.50 per share. Net proceeds of approximately $279.6 million will be used for payment of borrowings under revolving credit facilities.

Lead Underwriters: Goldman, Sachs & Co. (NYSE:GS), Morgan Stanley (NYSE:MS)

Financial Highlights:

Revenues decreased 29.3% to $149.7 million for the nine months ended December 31, 2009 compared to $211.6 million for the nine months ended December 31, 2008...Operating expenses for the nine months ended December 31, 2009 decreased to $28.4 million from $34.5 million for the nine months ended December 31, 2008...Earnings before income taxes for the nine months ended December 31, 2009 decreased to $55.0 million from $85.4 million for the nine months ended December 31, 2008...Net income for the nine months ended December 31, 2009 decreased to $3.2 million from $100.8 million for the nine months ended December 31, 2008...

Competitors

The natural gas storage business is competitive. The principal elements of competition among storage facilities are rates, terms of service, types of service, access to supply sources, access to demand markets and flexibility and reliability of service. Because our facilities are strategically located in key North American natural gas producing and consuming regions, we face competition from existing competitors who also operate in those markets. Our competitors include gas storage companies, major integrated energy companies, pipeline operators and natural gas marketers of varying sizes, financial resources and experience. Competitors of the AECO Hub™ currently include TransCanada (NYSE:TRP), Atco (ACO.X) and Enstor (Alberta Hub). Competitors of our Wild Goose facility currently include Buckeye Partners (NYSE:BPL), PG&E (NYSE:PCG) and a number of proposed projects in northern California. Competitors of our Salt Plains facility currently include Southern Star.

Given the key location of our facilities, additional competition in the markets we serve could arise from new developments or expanded operations from existing competitors. We anticipate that growing demand for natural gas storage in the markets we serve will be met with increasing storage capacity, either through the expansion of existing facilities or the construction of new storage facilities.

Additional Resources:

Source: Niska Gas Storage Prices IPO Within Range