Williams Partners to Significantly Expand Midstream Presence in Marcellus Shale
TULSA, Okla., Nov. 18, 2010 /PRNewswire-FirstCall/ — Williams Partners L.P. (NYSE: WPZ) announced today that it is significantly expanding its midstream business in Pennsylvania’s Marcellus Shale.
The partnership has agreed to acquire Cabot Oil & Gas Corporation’s (NYSE: COG) midstream assets located in Susquehanna County, Pa., for $150 million. The Cabot assets include approximately 75 miles of gathering pipelines and two compressor stations. The transaction is expected to close during the fourth quarter, subject to normal and customary closing conditions and regulatory clearance.
In addition, Williams Partners has added more than $150 million of expansion capital to fund the 2011 construction phase of additional gathering assets, including compression and dehydration, which will significantly augment the acquired assets. The partnership will continue to invest additional capital beyond 2011 to further expand the system. The combined gathering system will be capable of delivering approximately 1.2 billion cubic feet per day (Bcf/d) of natural gas over the next two to three years.
The new system will connect with Williams Partners’ previously announced Springville gathering pipeline in Susquehanna County. It will significantly expand the Springville system, as well as add additional delivery points.
The partnership has also agreed to a new long-term dedicated gathering agreement with Cabot for its production in the northeast Pennsylvania area of the Marcellus Shale. The 25-year agreement covers an area of mutual interest that currently includes 138,000 gross acres.
“This additional expansion in the Marcellus Shale is an ideal growth opportunity for Williams Partners,” said Alan Armstrong, senior vice president of Williams Partners’ midstream business. “We have the opportunity to serve another one of the biggest producers in the Marcellus with the type of large-scale solutions required for Cabot’s rapidly expanding production.
“The previously announced Springville system and this expansion will provide significant takeaway capacity to multiple interstate gas pipelines, including Transco,” Armstrong said. “In addition to our anchor customer agreement with Cabot, there will be future opportunities to help third-party producers grow their volumes and access large natural gas markets. Included among those potential producer customers is Williams’ exploration and production business, with its significant acreage position in northeast Pennsylvania.”
The previously announced Springville system is currently in the construction phase and is expected to be operational in mid-2011. The acquired Cabot assets are currently gathering approximately 230 million cubic feet per day (MMcf/d) of Cabot’s natural gas production. Construction will begin on the additional expansions to the Springville system and other new areas in 2011.
Williams Partners plans to fund the total of the $150 million purchase price of the Cabot midstream assets and the subsequent capital projects with cash on hand, borrowings from its credit facility and/or capital market transactions. The $150 million for the purchase of Cabot’s midstream assets and the additional $150 million for expansions in 2011 were not included in previous capital expenditure guidance.
About Williams Partners L.P. (NYSE: WPZ)
Williams Partners L.P. is a leading diversified master limited partnership focused on natural gas transportation; gathering, treating, and processing; storage; natural gas liquid (NGL) fractionation; and oil transportation. The partnership owns interests in three major interstate natural gas pipelines that, combined, deliver 12 percent of the natural gas consumed in the United States. The partnership’s gathering and processing assets include large-scale operations in the U.S. Rocky Mountains and both onshore and offshore along the Gulf of Mexico. Williams (NYSE: WMB) owns approximately 77 percent of Williams Partners, including the general-partner interest. More information is available at www.williamslp.com. Go to http://www.b2i.us/irpass.asp?BzID=1296&to=ea&s=0 or http://www.b2i.us/irpass.asp?BzID=630&to=ea&s=0 to join our email list.
Portions of this document may constitute “forward-looking statements” as defined by federal law. Although the partnership believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Any such statements are made in reliance on the “safe harbor” protections provided under the Private Securities Reform Act of 1995. Additional information about issues that could lead to material changes in performance is contained in the partnership’s annual reports filed with the Securities and Exchange Commission.
MEDIA CONTACT: INVESTOR CONTACT: Jeff Pounds Sharna Reingold (918) 573-3332 (918) 573-2078
SOURCE Williams Partners L.P.