Western Gas units post modest gain in market debut

NEW YORK - Units of Western Gas Partners LP posted a modest gain in their New York Stock Exchange debut Friday, a general down day for the market, after the company's initial public offering priced at $16.50 per unit, slightly below the expected price range.

Units added 2 cents to $16.52 in morning trading. Shares hit a low of $16.18 and a high of $16.65 earlier in the session.

The Woodlands, Texas-based company had expected the offering of 18.8 million units representing limited partner interests to price between $17 and $19 each. This was down from an original price estimate of between $20 and $22 per unit.

Western Gas Partners was formed by Anadarko Petroleum Corp. in August 2007 to own and operate some of its midstream assets. The company's assets currently consist of six gathering systems, five natural-gas treating facilities and one interstate pipeline, in Texas, Utah, Wyoming, Kansas and Oklahoma.

Based on the offering price, Western Gas raised about $309.4 million, before expenses, from the IPO. The company plans to use the proceeds to loan $260 million to Anadarko in exchange for a 30-year note, to reimburse Anadarko for $40.6 million of capital expenditures, for general partnership purposes and to pay for IPO-related expenses.

Following the close of the IPO, public shareholders will own a 35 percent limited partner interest in the company, or a 40 percent limited partner interest if the underwriters exercise their overallotment option in full. Anadarko will own the remaining equity interests, the company said.

UBS Investment Bank, Citi, Credit Suisse and Morgan Stanley led a large team of underwriters that also included Banc of America Securities; Goldman, Sachs & Co.; and JPMorgan. The underwriters have been granted the option to buy up to an additional 2.8 million units to cover any overallotments.

The offering is expected to close on or about May 14. Units are trading under the symbol "WES."

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