Williams Partners Inks Delphi Deal

Williams Partners L.P. (WPZ - Snapshot Report) recently struck a deal with private equity firm Delphi Midstream Partners, LLC to buy its Laser Northeast Gathering System and other midstream businesses. Williams Partners will shell out approximately $750 million for the acquisition, funded by $300 million in cash and approximately 7.5 million of common units.

The to-be acquired asset Laser Gathering System includes 33 miles long 16-inch natural gas pipeline and related gathering facilities in Susquehanna County, Pennsylvania and 10 miles long gathering pipeline in southern New York. 

Per the deal, Williams Partners will also buy Delphi's Mansfield Gathering System in the Barnett Shale near Fort Worth, Texas that comprises 19 miles of pipeline. 

The properties are located in the Marcellus Shale, which extends from Canada to Kentucky. With volume expected to increase in the Marcellus Shale, the Laser system production capacity will likely touch 1.3 billion cubic feet per day (Bcf/d).

The acquisition, subject to customary regulations and approvals, is expected to be completed by the first quarter of 2012.

This acquisition is consistent with Williams Partners’ long-term plan of providing service to the producers via big-scale midstream infrastructure in the Marcellus Shale and other basins.

Tulsa, Oklahoma-based Williams Partners is a master limited partnership formed by The Williams Companies Inc. (WMB - Analyst Report). Williams Partners is occupied in gathering, transportation, treating, and processing of natural gas as well as the fractionation and storage of natural gas liquids.

We see the partnership to be well positioned for future growth owing to its geographically diverse assets, a sizable project backlog as well as sound distribution history.

Williams Partners, which retains a Zacks #3 Rank (short-term Hold rating), competes with Enterprise Products Partners LP (EPD - Analyst Report) and Kinder Morgan Energy Partners, L.P. (KMP - Analyst Report).

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