Williams Recaptures Investment-Grade Rating
By Anonymous
The Williams Cos., Tulsa, Okla., (NYSE: WMB) has won investmentgrade credit again. Standard & Poor’s Ratings Services has given the diversified energy company a BBB- corporate-credit rating (up from BB+). Williams mortgaged its Rockies E&P business to Warren Buffett-led Berkshire Hathaway in 2002 for $900 million in a 364- day, 34% interest-rate loan to survive the energy-trading collapse of third-quarter 2001 that nearly destroyed prominent oil and gas producer El Paso Corp. as well.
The total loan cost $1.17 billion and was paid off early from proceeds from other asset sales. The Rockies E&P collateral had been purchased by Williams in second-quarter 2001 from Barrett Resources Corp. for $2.5 billion in cash and stock, when winning a bidding contest with Shell oil Co.
Besides its large E&P business, Williams’ subsidiaries include Northwest Pipeline Corp., Transcontinental Gas Pipe Line Corp. and Williams Partners LP. Williams sold its power business to Bear Energy LP, a unit of The Bear Stearns Cos. Inc., recently for $496 million.
S&P reports that Williams’ sale of its power business “relieves it of volatile operating cash flows and the need to post collateral for its mark-to-market power transactions, which should free up to $450 million of liquidity. The rating also reflects the company’s improved financial metrics resulting from strong business results across all business segments.”
Bois d’Arc Energy Inc., Houston, (NYSE: BDE) has decided not to sell the company and to instead repurchase shares.
Bois d’Arc, which focuses on the Gulf of Mexico, solicited several preliminary purchase offers, but no offer guaranteed sufficient financing. Instead, the company will buy back of up to $100 million of its common shares.
The company’s assets are offshore Louisiana and Texas, including interests in 44 oil wells and 67 gas wells. Proved reserves on June 1 were approximately 404 billion cu. ft. of gas equivalent, up from some 344 billion equivalent at year-end 2006.
Bois d’Arc chairman M. Jay Allison says, “Bois d’Arc and its board conducted an extensive process of evaluating strategic alternatives during a period of uncertainty in the financing markets. After carefully reviewing other strategic alternatives, our board believes that the best option for our shareholders is to continue to pursue our established and successful business plan augmented by a repurchase of shares.”
Scotia Waterous and Raymond James & Associates were advisors for Bois d’Arc’s strategic-alternatives review.
Standard & Poor’s Rating Services reported the ratings and outlook for Comstock Resources Inc., Frisco, Texas, (NYSE: CRK) which holds approximately 50% of BDE shares, remains unchanged (BB-/ Stable/-).
S&P reports. “Given this announcement, (Comstock’s) near-term debt repayment is unlikely. However, considering consolidated leverage is already at the high end of the BB- category, at approximately $4 per bbl., we could revise the outlook to negative if leverage measures worsen materially from current levels.”
Copyright Hart Energy Publishing, LP Jan 2008
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