Source: Williams Partners
Williams Partners L.P. (NYSE: WPZ) 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. Both Williams Partners and Williams are providing a full update to 2010-12 earnings and capital expenditure guidance in their third-quarter 2010 financial results, which are being released today.
The board of directors of the general partner of Williams Partners approved the transaction based upon a recommendation from its conflicts committee. The conflicts committee, which is comprised entirely of independent directors, retained independent legal and financial advisors to assist it in evaluating and negotiating the transaction.