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.
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