- 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
TULSA, OK and TORONTO, March 18,
2019 /CNW/ - 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").
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.
SOURCE Canada Pension Plan Investment Board