Williams Partners to acquire Williams' Piceance assets

TULSA, Okla. - Williams Partners L.P. (NYSE: WPZ) announced on Oct. 28 that it has agreed to acquire Williams' (NYSE: WMB) gathering and processing assets in Colorado's Piceance Basin for $782 million.

Williams Partners' total consideration for the assets will include $702 million in cash and $80 million in WPZ limited-partner and general-partner units.

The assets include the Parachute Plant Complex, three other treating facilities with a combined processing capacity of 1.2 billion cubic feet per day (Bcf/d), and a gathering system with approximately 150 miles of pipeline.

There are more than 3,300 wells connected to the gathering system, which includes pipelines ranging up to 30-inch trunk lines.

Williams Partners plans to fund the cash portion of the acquisition, which is expected to close next month, with its revolving credit facility and/or debt. The transaction is expected to be immediately accretive to distributable cash flow for Williams Partners, on a per-unit basis for the partnership's unitholders.

"This acquisition adds significant scale to our overall midstream business and makes Williams Partners the largest and most diverse midstream provider in the Piceance Basin," said Steve Malcolm, chief executive officer of the general partner of Williams Partners. "Furthermore, we have a long-term gathering agreement in place with Williams, which is the largest producer in the Piceance Basin.

"It also adds to the fee-based portion of our midstream business, as nearly 100 percent of the revenue associated with these assets is fee-based," Malcolm said.

Williams Partners expects the new assets will generate approximately $105 million in segment profit plus depletion, depreciation and amortization (DD&A) for its midstream business in 2011.

Williams announces $12 billion revamp plan for pipeline affiliates

NEW YORK - Shares of natural-gas producer and pipeline firm Williams Cos. rallied on Jan. 19 after it said before the stock market opened that it would restructure its affiliates in a series of transactions that it valued at a combined $12 billion.
At day’s end, Williams Cos. Inc. (NYSE: WMB) closed up $1.73 per share at $23.10 per share (up 8.10 percent). Williams Partners LP (NYSE: WPZ) closed up $5.60 per share at $36.39 (up 18.19 percent), and Williams Pipeline Partners LP (NYSE: WMZ) closed up $3.84 at $27.19 (up 16.45 percent).
Williams said it plans to contribute its gas pipeline business and domestic distribution system and its limited and general partner interests in Williams Pipeline Partners into Williams Partners LP.
After the transactions, Williams Pipeline Partners will no longer be publicly traded.
"The restructuring is intended to drive additional growth and value for Williams' shareholders and Williams Partners' unitholders," Williams said.
"The moves will result in two well-capitalized entities that are better positioned to pursue value-adding growth strategies; both expect to have investment-grade credit ratings."
As part of the deal, Williams will purchase $3 billion of its corporate debt from the $3.5 billion in cash it will receive from Williams Partners. That cash, plus the value of 203 million Williams Partners units and $2 billion in assumed debt comprise the bulk of the $12 billion value for the deal.
Williams Partners will boost its regular quarterly distribution by 3.5 percent per LP unit to 65.8 cents from 63.5 cents starting with the first quarter.
Williams Partners will offer a fixed exchange ratio of 0.7584 of its common units for each Williams Pipeline Partners common unit. The exchange values Williams Pipeline Partners at $23.35 a unit, flat with its closing price on Jan. 15.