Williams acquisition Marcellus Shale

Source: Williams Partners L.P.

Williams Partners L.P. (NYSE:WPZ ) has completed its previously announced acquisition of Caiman Energy’s wholly owned subsidiary, Caiman Eastern Midstream, LLC. The acquisition provides Williams Partners with a significant footprint and growth potential in the natural gas liquids-rich portion of the Marcellus Shale.

Williams (NYSE:WMB) owns approximately 68 percent of Williams Partners, including the general-partner interest.

“With the completion of this major acquisition, we’re well on our way to become the leading provider of gathering, processing and transportation solutions for producers in the Marcellus Shale,” said Alan Armstrong, chief executive officer of Williams Partners’ general partner.

The acquisition establishes Williams Partners’ new Ohio Valley Midstream business. The operation area is northern West Virginia, southwestern Pennsylvania and eastern Ohio. Work is under way to expand the existing physical assets, which include a gathering system and a processing facility. In addition, construction is underway on fractionation and additional processing facilities and there are plans to construct natural gas liquid (NGL) pipelines.

The new business is anchored by long-term contracts, including gathering dedications totaling 236,000 acres from 10 producers. In addition, there are processing commitments in place for 100 million cubic feet per day.

Williams Partners plans to operate its Ohio Valley Midstream business from West Virginia. The partnership has put an experienced management team in place, along with approximately 50 former Caiman Eastern employees, to facilitate continued operations and expansions. It plans to continue to add staff locally.

Williams Partners and the owners of Caiman Energy are continuing work to create a joint venture to develop midstream infrastructure in the NGL- and oil-rich areas of the Utica Shale, primarily in Ohio and northwest Pennsylvania. Caiman Energy’s private-equity backers include EnCap Flatrock Midstream, EnCap Investments L.P. and Highstar Capital.

Williams Partners funded the approximate $2.4 billion purchase price of the Caiman Eastern acquisition with a combination of approximately $1.72 billion in cash, net of purchase price adjustments, and the issuance to Caiman of approximately 11.8 million Williams Partners common units.

Williams Partners in the Marcellus

The Caiman Eastern acquisition builds on Williams Partners’ strategy to develop large-scale infrastructure that connects Marcellus Shale producers’ natural gas and NGLs to the best markets.

Across the Marcellus Shale, the partnership has gathering dedications on 1.2 million acres. It expects gathering volumes there to reach 5 Bcf/d by 2015.

In Northeastern Pennsylvania, Williams Partners is building the Susquehanna Supply Hub, with plans for 3 Bcf/d of takeaway capacity by 2015 to deliver Marcellus Shale production into four major interstate gas pipeline systems.

In western Pennsylvania, Williams Partners owns a 51-percent interest and operates the Laurel Mountain Midstream joint venture. Laurel Mountain includes a gathering system of nearly 1,400 miles of pipeline with a capacity of approximately 230 MMcf/d. The Laurel Mountain system is expected to reach approximately 1 Bcf/d of gathering by 2015.

Williams Partners’ Transco interstate gas pipeline system runs through eastern Pennsylvania and has several expansion projects that are outlets for Marcellus Shale production. As well, the partnership has an ongoing open season to gauge customer interest in its proposed Atlantic Access project. As proposed, Atlantic Access would significantly expand direct access for Marcellus and Utica Shale natural gas to both Northeast and Southern U.S. markets by late 2015.



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