Healthy Debuts for Lehigh Gas, Marathon MLP IPOs

Both see unit prices exceed initial offering prices

NEW YORK -- Two midstream oil-industry public offerings were greeted enthusiastically by investors this past week as refinery owners--and investors--look to take advantage of the tax benefits offered by master limited partnerships.

First, Lehigh Gas Partners LP's units traded higher in their initial public offering (IPO).

Lehigh's common units opened at $21.41 on the New York Stock Exchange, up 7% from the $20 offer price, according to a report in the Wall Street Journal. The firm had priced 6 million units at the midpoint of the expected range between $19 and $21 a unit.

Shares rose 7.4% to $21.48 in recent trading.

Soon after, MPLX LP got a warm reception from investors, as the owner of energy assets carved out from refiner Marathon Petroleum Corp. rose in its stock-market debut, WSJ reported.

MPLX's units opened at $25.50 on the New York Stock Exchange, up 16% from their $22 offer price. MPLX sold 17.3 million units at $22 apiece in a deal valued at $381 million. The deal size was increased from 15 million units, and the price was fixed above the expected range of between $19 and $21.

The units rose 18% to $26.05 in recent trading.

MPLX generates fees primarily from owning and operating crude-oil pipeline assets servicing Marathon and other retail companies across the Midwest, as well as in segments of Louisiana and Texas.

Allentown, Pa.'s Lehigh Gas Partners, formed by affiliate Lehigh Gas Corp. and controlled by majority owner Topper Group, is a wholesale distributor of gasoline and diesel fuel to gas stations, truck stops and toll-road plazas from Ohio to Massachusetts. The company also owns and leases sites that sell the fuels.

MLPs have been listing in a flurry, with their relatively high payouts garnering attention at a time when bond yields are low.

(Watch for an exclusive investigative report on MLPs in the convenience store/retail petroleum industry in the November issue of CSP magazine.)