North American energy firm,
Williams Companies Inc.
) has decided to purchase the remaining 50% general partner (GP)
interest and 55.1 million limited partner (LP) units in
Access Midstream Partners LP
). Williams Companies will spend roughly $6.0 billion in cash to
procure the stake and units of the master limited partnership (MLP)
engaged in the midstream business.
The acquisition will likely give Williams Companies full GP
ownership and 50% LP interest in the Oklahoma City-based
partnership. The transaction is likely to close by the third
Williams Companies also has a plan to merge energy infrastructure
Williams Partners LP
) with Access Midstream Partners. Notably, Williams Companies has
72% ownership in Williams Partners (including the general-partner
Williams Companies added that with the advent of hydraulic
fracturing (or fracking) -- a method used to extract natural gas by
blasting underground rock formations with a mixture of water, sand
and chemicals -- shale gas production is now booming in the
U.S. The increased production in turns creates huge demand
for natural gas transportation. We believe that with the
acquisition, Williams Companies will significantly improve its
transportation and midstream businesses as Access Midstream holds a
strong portfolio of natural gas pipelines and gathering assets in
the Marcellus, Barnett, Utica, Haynesville, Eagle Ford,
Mid-continent and Niobrara shale regions.
The benefits from the acquisition would be reflected in Williams
Companies' third quarter dividend, which is expected to increase
32.0% to 56 cents per share. The projected annualized dividend for
2014 and 2015 is $1.96 and $2.46, respectively. For 2015 through
2017, the company plans a 15% dividend hike.
Tulsa, OK-based Williams Companies is a premier energy
infrastructure provider in North America. But we remains concerned
with the company's extensive natural gas exposure, which raises its
sensitivity to the commodity's price, which continues to be
As a results, Williams Companies currently retains a Zacks Rank #3
(Hold), which implies that it is expected to perform in line with
the broader U.S. market in the next one to three months.
Meanwhile, one can look at better-ranked players in the same
industry such as
EQT Midstream Partners LP
) which carries a Zacks Rank #1 (Strong Buy).
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WILLIAMS COS (WMB): Free Stock Analysis Report
WILLIAMS PTNRS (WPZ): Free Stock Analysis
ACCESS MIDSTRM (ACMP): Free Stock Analysis
EQT MIDSTRM PTR (EQM): Free Stock Analysis
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