Williams, BWP Tie-up Official

Zacks

North American energy firm, Williams Companies Inc. (WMB) declared that it has formalized the joint venture with a master limited partnership, Boardwalk Pipeline Partners LP (BWP), for developing a pipeline project. On Mar 6, 2013, both the parties signed a letter of intent to form this venture.

The Bluegrass pipeline will carry natural gas liquids (NGL) to the growing petrochemical complex on the Gulf Coast from Utica and Marcellus shale plays situated in Ohio, W. Va and Pa.

In the first phase of the development, the pipeline system will carry the NGL at a rate of 200,000 barrels a day from the producing regions of Ohio, W. Va and Pa. In the second phase, in order to support the growing market demand, the capacity of the pipeline will be doubled to a rate of 400,000 barrels a day, by the addition of extra pumping capacity.

Per the deal, a new pipeline will be constructed to carry NGL from the producing regions of Ohio, W. Va and Pa. to the Texas Gas Transmission system of Boardwalk, based in Hardinsburg, Ky. Additionally, a fractionation plant and NGL storage facilities will be developed in La. Moreover, the companies are also planning to build a new liquefied petroleum gas terminal on the Gulf Coast to better access international customers.

The proposed pipeline is expected to be operational in the second half of 2015, subject to the fulfillment of all the required conditions.

Tulsa, Okla.-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’ midstream assets, which are less sensitive to commodity prices, help the company to maintain a steady stream of revenues and cash flow even if natural gas prices stay low.

However, we remain concerned about Williams Companies’ high debt levels, which leaves it vulnerable to an extended drop in commodity prices. As of Mar 31, 2013, Williams had long-term debt of more than $10.6 billion, representing a debt-to-capitalization ratio of 68.9%.

Williams currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Two energy infrastructure suppliers, Atlas Energy LP (ATLS) and EQT Midstream Partners LP (EQM) are expected to significantly outperform the broader U.S. equity market over the next one to three months. Both the firms sport a Zacks Rank #1 (Strong buy).

To read this article on Zacks.com click here.

Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.

Be the first to comment

Leave a Reply