19-03-2012

Williams partners announces $2.5B acquisition to establish major footprint in liquids-rich area

Williams  Partners L.P. today announced it has agreed to acquire Caiman Energy's wholly owned subsidiary, Caiman Eastern Midstream LLC,  for approximately $2.5 billion. The acquisition will provide Williams Partners with a significant footprint and growth potential in the  natural gas liquids-rich portion of the Marcellus Shale.

Williams owns 72 percent of Williams Partners, including the general-partner interest. Caiman Energy is backed by private equity investors including EnCap Flatrock Midstream, EnCap Investments L.P. and Highstar Capital.

Caiman Eastern Midstream is an independent gathering and processing business located in northern West Virginia, southwestern Pennsylvania  and eastern Ohio. Caiman's existing physical assets include a gathering system, two processing facilities and a fractionator. Expansions to the  gathering system, processing facilities and fractionator are currently under construction. An ethane pipeline is also planned.

The assets are anchored by long-term contracted commitments, including 236,000 dedicated gathering acres from 10 producers in West Virginia, Ohio and Pennsylvania.

Williams Partners expects significant growth in gathering volumes and  NGL production from these assets. There is an estimated 300 trillion  cubic feet (Tcfe) of natural gas in place within a 35-mile radius of the  system, and a significant amount remains undedicated. The partnership  expects the Caiman system to gather more than 2 billion cubic feet per  day (Bcf/d) and produce approximately 300,000 barrels per day (bbl/d) of  NGLs and condensate by 2020. It expects the acquisition to be accretive  to projected distributable cash flow attributable to partnership  operations per LP unit by 2013, with substantial projected growth  thereafter.

Joint Venture to Develop Utica Shale Infrastructure
Williams Partners is also announcing it intends to participate in a new  joint venture with Caiman Energy and its investors and management to  develop midstream infrastructure in the NGL- and oil-rich areas of the  Utica Shale, primarily in Ohio and northwest Pennsylvania.

CEO Perspective
"These new assets, anchored by long-term agreements with a diverse set  of customers, give us a major presence in the liquids-rich portion of  the Marcellus Shale," said Alan Armstrong, chief executive officer of  Williams Partners' general partner. "We expect significant long-term  growth potential because the liquids-rich gas makes this area the most  economical and top-performing play for producers in North America.
"It's also just adjacent to the rich gas and oil-producing portions of  the Utica Shale, where we're planning on developing new infrastructure  with Caiman. Our goal is to be the leading gathering, processing and  transportation solution provider for producers in the Marcellus Shale.

"We're putting together the kind of infrastructure that makes drilling  in the Marcellus even more desirable for producers because we provide  large-scale infrastructure solutions that connect producers' natural gas  and natural gas liquids to the best markets."

Jack Lafield, president and CEO of Caiman Energy, made the following  comments:
"We're pleased that this transaction will achieve a strong return for  our investors at EnCap and Highstar Capital. We're very proud of the  sizable rich gas system we've built in the Marcellus and the great  relationships Caiman has developed with producers and the people of West  Virginia. The Williams name is synonymous with excellence and superior  customer service. We're excited to turn over our gathering and  processing assets to the Williams team. Williams has a unique ability to  build on the value we've created in the Marcellus. They will serve our  customers and the people of West Virginia with distinction.

"Today also marks the beginning of an exciting new alliance with  Williams Partners," Lafield said. "We're looking forward to working with  Williams in the Utica Shale to bring midstream infrastructure to Ohio  for producers working in this dynamic and rapidly evolving play. When  you combine our management team and the expertise of both our companies  in gas gathering, processing and NGLs, with our shared commitment to  community and customer-focused solutions, it's clear that Caiman and  Williams are a powerful team."