- Strategic partnership between Williams
and CPPIB to support ongoing growth and Northeast region
optimization
- Williams consolidates 100% interest in
Utica East Ohio Midstream (“UEO”) and assumes operatorship
- Williams expects to receive
approximately $1.34 billion in exchange for a 35% interest in a
combined UEO-Ohio Valley Midstream (“OVM”) joint venture, providing
Williams with a net of approximately $600 million, after
transaction fees and paying for the UEO interest, allowing for debt
reduction and funding of Williams’ attractive growth capital in the
region
- Enables synergies from common UEO-OVM
operatorship
Williams (NYSE: WMB) today announced a series of transactions
that will establish a new platform for the optimization of its
midstream operations in the western Marcellus and Utica basins
through a long-term partnership with Canada Pension Plan Investment
Board (“CPPIB”).
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Williams and CPPIB have entered into a definitive agreement to
establish a US$3.8 billion joint venture that will include
Williams’ 100 percent owned Ohio Valley Midstream system (“OVM”)
and 100 percent of Utica East Ohio Midstream system (“UEO”). CPPIB
will invest approximately $1.34 billion (subject to closing
adjustments) for a 35 percent ownership stake in the joint venture.
Williams will retain 65 percent ownership, will operate the
combined business, and will consolidate the financial results of
the joint venture in Williams’ financial statements.
Concurrent with signing the agreement with CPPIB to purchase a
35 percent interest in the joint venture, Williams purchased the
remaining 38 percent stake in UEO from Momentum Midstream and will
take over operatorship. The UEO acquisition was signed and closed
today. UEO is involved primarily in the processing and
fractionation of natural gas and natural gas liquids in the Utica
Shale play in eastern Ohio.
Williams expects synergies through common ownership by combining
UEO and OVM to create a more efficient platform for capital
spending in the region, resulting in reduced operating and
maintenance expenses and creating enhanced capabilities and
benefits for producers in the area.
“Acquiring the remaining interest in UEO and forming a
partnership with CPPIB continues to advance our already strong
position in the Northeast,” said Alan Armstrong, president and
chief executive officer of Williams. “These transactions create a
platform for continued optimization and growth, provide
deleveraging, reduce capital spending on processing and
fractionation capacity for OVM, and unlock further synergies
through combined operatorship of the systems.”
“This joint venture will provide CPPIB additional exposure to
the attractive North American natural gas market, aligning with our
growing focus on energy transition,” said Avik Dey, Managing
Director, Head of Energy & Resources, CPPIB. “The joint venture
complements our recent investment in Encino Acquisition Partners,
an anchor customer on UEO and other Williams gathering assets.
Through these unique operations in highly attractive basins, we
will further our strategy to establish U.S. midstream exposure
alongside highly regarded and experienced operating partners such
as Williams. We look forward to expanding this new joint venture
over time.”
“We’ve seen first-hand the focus of the UEO employees on
delivering safe, environmentally compliant and reliable results,
and we are excited to welcome these employees to Williams,” said
Micheal Dunn, chief operating officer of Williams. “Williams looks
forward to helping Encino and CPPIB maximize their important
investment in the basin through safe, reliable and cost-efficient
services.”
The cash proceeds to Williams from the purchase by CPPIB of its
35 percent interest in the joint venture will be used to offset the
purchase price of the UEO acquisition, with the balance of proceeds
used to fund Williams’ extensive portfolio of attractive growth
capital and for debt reduction.
Closing of CPPIB’s investment in the joint venture, which is
expected to occur in the second or third quarter of 2019, is
subject only to customary closing conditions, including regulatory
approvals.
Williams plans to provide updated 2019 financial guidance with
its first-quarter 2019 earnings release.
The joint venture excludes Williams’ ownership interests in
Flint Gathering, Cardinal Gathering, Marcellus South Gathering,
Laurel Mountain Midstream and Blue Racer Midstream.
For the combined transactions, Morgan Stanley and CIBC Capital
Markets acted as financial advisors to Williams. Gibson Dunn served
as legal counsel to Williams.
About Williams
Williams (NYSE: WMB) is a premier provider of large-scale
infrastructure connecting U.S. natural gas and natural gas products
to growing demand for cleaner fuel and feedstocks. Headquartered in
Tulsa, Oklahoma, Williams is an industry-leading, investment grade
C-Corp with operations across the natural gas value chain including
gathering, processing, interstate transportation and storage of
natural gas and natural gas liquids. With major positions in top
U.S. supply basins, Williams owns and operates more than 30,000
miles of pipelines system wide – including Transco, the nation’s
largest volume and fastest growing pipeline – providing natural gas
for clean-power generation, heating and industrial use. Williams’
operations handle approximately 30 percent of U.S. natural gas.
www.williams.com
About Canada Pension Plan Investment Board
Canada Pension Plan Investment Board (CPPIB) is a professional
investment management organization that invests the funds not
needed by the Canada Pension Plan (CPP) to pay current benefits in
the best interests of 20 million contributors and beneficiaries. In
order to build a diversified portfolio, CPPIB invests in public
equities, private equities, real estate, infrastructure and fixed
income instruments. Headquartered in Toronto, with offices in Hong
Kong, London, Luxembourg, Mumbai, New York City, São Paulo and
Sydney, CPPIB is governed and managed independently of the Canada
Pension Plan and at arm's length from governments. At December 31,
2018, the CPP Fund totalled C$368.5 billion. For more information
about CPPIB, please visit www.cppib.com or follow us
on LinkedIn, Facebook or Twitter.
Portions of this document may constitute “forward-looking
statements” as defined by federal law. Although the company
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 company’s
annual and quarterly reports filed with the Securities and Exchange
Commission.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190318005762/en/
WilliamsMedia ContactKeith Isbell(918)
573-7308
Investor ContactsGrace Scott(918) 573-1092
John Porter(918) 573-0797
CPPIBDarryl KonynenbeltDirector, Global Media
Relations416-972-8389dkonynenbelt@cppib.com
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