Williams Partners LPWPZ recently declared that it has inked an agreement with Western Gas Partners, LP WES and some of its affiliates to boost its ownership stake in two Marcellus Shale natural gas gathering systems already operated by it.
In return, Western Gas and its affiliates will obtain Williams Partners' 50% ownership stake in Delaware Basin JV Gathering LLC ("DBJV") that is operated by the former. Under the terms of the transaction, Williams Partners will receive Western Gas' 33.75% ownership stake in both the Rome and Liberty natural gas gathering systems in northern Pennsylvania, along with a cash payment of $155 million.
The aforesaid deal will enhance Williams Partners' ownership interest to 67.5% (subject to customary joint venture partners' rights) in both the Rome and Liberty gathering systems. Notably, both these gathering systems are operated by Williams Partners and are included in its Bradford Supply Hub in the Northeast G&P segment. Current throughput on these gathering systems is about 1.6 billion cubic feet per day.
This apart, Williams Partners has inked an agreement with Anadarko Petroleum Corporation APC to divest its 33.33% interest in the Ranch Westex gas processing plant in the Delaware Basin for $45 million in cash.
Irrespective of these agreements, Williams Partners will continue to be present in the Delaware Basin to support its gathering and processing customers there through its gathering systems.
Notably, the cash consideration for both the transactions will likely be used by the partnership for general partnership purposes, such as funding growth capital.
Both transactions are expected to be closed in late first-quarter or early second-quarter 2017. The agreements are subject to customary closing conditions, including expiration of the waiting period under the HSR Act.
Investor confidence on the Williams Partners stock is reflected in its price chart. Shares of the company appreciated 17.6% in the last three months, while the Zacks categorized Oil Exploration and Production MLP industry gained 15.5% in the same time span.
Williams Partners currently carries a Zacks Rank #3 (Hold). A better-ranked player from the same space is Denbury Resources Inc. DNR , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Denbury Resources posted a positive earnings surprise of 100.00% in the last reported quarter. It had an average earnings surprise of 283.33% in the four trailing quarters.
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