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North American energy firm Williams Companies Inc. (WMB - Analyst Report) recently announced a 3.70% senior note offering of $850 million, due in 2023. The offer price would be 99.722% of the par value.

Earlier this month, Williams Companies agreed to acquire a 25% stake in natural gas partnership Access Midstream Partners L.P. (ACMP - Snapshot Report) and a 50% interest in its general partner – Access Midstream Partners GP LLC – from private equity firm Global Infrastructure Partners. Williams Companies will be using the net proceeds from the offering to finance this deal. The proceedings are expected to be completed on December 18, 2012.

During the third quarter of 2012, Williams’ capital expenditure was $730 million. As of September 30, 2012, it had cash and cash equivalents of about $996 million and long-term debt of more than $9.5 billion, representing a debt-to-capitalization ratio of 75.5%. We expect interest expenses to increase with the sale of the new notes.

Williams has also commenced a public offering of 46,500,000 shares of its common stock this month. Moreover, the company intends to provide the underwriters with a 30-day option to purchase up to 6,975,000 additional shares.

Tulsa, Oklahoma-based Williams is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing, and transportation of natural gas.

Williams, after the volatile and capital-intensive WPX Energy spin-off, has transformed itself into a pure play midstream conglomerate with operations spanning from the Canadian oil sands to deepwater fields in the Gulf of Mexico.

We believe that the transfer of upstream assets (post-split) has left Williams with a less diversified business. As a result, the business risk profile of the reorganized Williams is weaker than that of the pre-spin-off company.

We maintain our long-term Neutral recommendation, supported by a Zacks #3 Rank (short-term Hold rating).

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