Williams Partners L.P. WPZ, announced its decision to acquire an additional 21% equity interest in UEO from a subsidiary of EV Energy Partners, L.P. EVEP. The partnership already holds a 49% equity interest in Utica East Ohio Midstream LLC (“UEO”) through its subsidiary – Utica Gas Services. The transaction is valued at about $575 million.
Post acquisition, Williams Partners will own an equity interest of 70% in UEO. UEO has significant natural gas midstream business in the Utica Shale in eastern Ohio. The gathering, processing, fractionation and storage assets are supported by long-term, fee-based contracted commitments.
The other member of UEO has the right to purchase a part of EV Energy Partners’ interests in UEO for the same price. If this right is exercised by the other member, Williams Partners would purchase about 13% interest while the other member would purchase about 8% interest.
Williams Companies Inc. WMB – which has a general partner interest in Williams Partners – has agreed to renounce about $43 million of general partner incentive distribution rights for the three-year period from 2015 through 2017, in relation to the takeover of the additional 21% interest. The acquisition is expected to be financed by Williams Partners with a combination of equity and debt including revolver borrowings.
The transaction is anticipated to close by the middle of Jul 2015. The deal is subject to customary purchase price adjustments and closing conditions, which includes the conclusion of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
Williams Partners gathers, transports and processes natural gas, as well as stores and fractionates natural gas liquids (NGLs). The partnership operates through four segments – Northeast Gathering and Processing, Atlantic-Gulf, West and NGL and Petchem Services.
Williams Partners currently carries a Zacks Rank #3 (Hold). A better-ranked stock from the oil and gas sector, Phillips 66 Partners L.P. PSXP, sports a Zacks Rank #1 (Strong Buy).
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