Noble Midstream Partners, a partnership firm formed by Noble Energy, recently announced today that the Board of Directors of the General Partner has given approval for a reduction of 73 percent to the quarterly distribution to $0.1875 per unit, which the company plans to hold flat currently.
For the record, the partnership was formed by Noble Energy to operate, own, acquire and develop domestic midstream infrastructure assets.
As per sources close to the matter, this change will be effective immediately and is expected to preserve approx. $200 million of annualized cash for supporting the balance sheet.
Along with the distribution policy revision, the Noble Midstream Partners previously announced a $75 million capital reduction for 2020. In addition, the company has also identified $15 million at least in operating cost savings and will be undertaking several actions to further lower the company’s cost structure and defer project capital in 2020.
With growing equity-investment contributions and plan adjustments, the partnership is likely to transition to self-funding by the end of 2020, bringing down overall net debt even in a low or no activity landscape.
Brent Smolik, CEO of the General Partner of Noble Midstream, reportedly said that the company prioritizes financial discipline and is making smart moves to reduce leverage in a volatile commodity and market environment.
Smolik added saying that the new distribution amount, announced capital as well as cost reductions, is designed to augment the sustainability of the business and build up the Partnerships’ financial position and flexibility.
As per Industry experts, Noble Midstream Partners continues to focus on its customer base as well as on continuing reliable and safe operations along with working with its customers to further bring in line activity as well as volume expectations. The company is planning to update its operational and financial guidance for the year with first-quarter 2020 results.