Williams Partners LP (NYSE: WPZ) has completed the transaction to acquire Williams’ (NYSE: WMB) currently in-service Alberta, Canada operations for US$1.2 billion. The partnership announced the agreement on Feb. 26.
The assets include an oil sands offgas processing plant near Fort McMurray, 260 miles of NGL and olefins pipelines, as well as an NGL/olefins fractionation facility and butylene/butane splitter facility at Redwater. Williams Partners also acquired an in-progress expansion project at the Redwater facility. The expansion will provide additional fractionation business to Williams Partners related to development of offgas processing at the CNRL Horizon upgrader facility retained by Williams.
Williams Partners expects the addition of these assets via this acquisition will be accretive to distributable cash flow, on a per-unit basis for the partnership’s unitholders. Williams Partners funded the acquisition with the issuance to Williams of 25.6 million Class D payment-in-kind (PIK) limited-partner units, $25 million in cash and an increase to the general partner’s capital account to maintain Williams’ 2% general-partner interest.
Upon conversion of the PIK units, Williams expects to gain increased distributions from Williams Partners. The increased distributions from Williams Partners support Williams’ dividend growth strategy. Following this transaction, Williams owns 66% of Williams Partners, including the general-partner interest.