Williams Partners L.P.
) plans to develop midstream infrastructure with Caiman Energy II
for oil and gas producers in the Utica Shale area of Ohio and
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Williams Partners will fund part of the $800 million joint venture
to develop natural gas, natural gas liquid (NGL) and crude oil
gathering and processing infrastructure. The other parties to the
deal are Caiman, EnCap Flatrock Midstream of San Antonio and
Highstar Capital of New York.
Williams Partners' expected share of the total investment in the
potential development is approximately $380 million over the next
several years. The introduction of wide-ranging large-scale
midstream infrastructure in the area along with Williams Partners'
financial strength and expertise would create convincing midstream
solutions for drilling locations in this play.
According to the state's Department of Natural Resources, the Utica
shale formation has a potential reserve of approximately 5.5
billion barrels of oil and 15.7 trillion cubic feet of natural gas.
This midstream infrastructure development will benefit from
proximity to the partnership's new Ohio Valley Midstream operations
in northern West Virginia, southwestern Pennsylvania and eastern
The partnership is expanding its existing gathering system and a
processing facility in the region. Construction is also under way
on fractionation and additional processing facilities. The
partnership also plans to construct NGL pipelines.
Williams Partners is an energy master limited partnership engaged
in gathering, transportation, treating and processing of natural
gas as well as fractionation and storage of NGLs. The general
partner of the partnership is owned and managed by
Williams Companies Inc.
We believe William Partners is well positioned for future growth
owing to its geographically diverse assets, a sizable project
backlog as well as a sound distribution history.
In March, Williams Partners agreed to buy Caiman Energy's midstream
unit − Caiman Eastern Midstream LLC − for $2.5 billion in cash and
equity. The deal will significantly increase Williams Partners'
footprint in the Marcellus Shale region. The transaction will
entitle the partnership to collect more than 2 billion cubic feet
of natural gas per day (Bcf/d) and produce about 300,000 barrels
per day (bbl/d) of natural gas liquids by 2020 from the Caiman
pipeline system. The partnership also highlighted that it intends
to join Caiman in developing processing facilities in the Utica
Shale, in Ohio and northwestern Pennsylvania.
The partnership currently holds a Zacks #3 Rank, which is
equivalent to a short-term Hold rating.