Firm to sink more cash into gas exploration

A corporate restructuring will enable one of the main producers of natural gas in the Piceance Basin to put more money into exploration and production.

Williams Cos. will pass along its pipeline and midstream businesses to Williams Partners, pumping about $3.5 billion in cash into Williams Cos.

Williams CEO Steve Malcolm said the goal is to create a simpler company with greater access to capital that can be used for exploring and producing gas, including reservoirs in the Piceance Basin that Williams executives said could be as productive as any of the major shale developments in the nation.

There will be no immediate day-to-day change in operations, Williams spokesman Jeff Pounds said.

“The goal is to grow all three businesses: exploration and production, pipeline and midstream,” and it follows on the company’s commitment to the region in the form of the Willow Creek gas-processing plant, Pounds said.

Williams’ $360 million Willow Creek plant began operations Aug. 7,  processing 450 million cubic feet of natural gas per day.

“There are lots of attractive growth projects in the Piceance” that the restructuring will allow Williams to more effectively pursue, Pounds said.

Williams, based in Tulsa, Okla., will get about $3.5 billion in cash from Williams Partners, its midstream natural gas processing company, to pay down debt. Williams also is offering to purchase up to $3 billion of its debt in a cash tender offer.

A key asset Williams brings to the partnership is the Texas Transcontinental Gas pipeline, which runs to Pennsylvania’s natural-gas-rich Marcellus Shale region. It carries gas from the Gulf Coast through Southern and mid-Atlantic states to New Jersey and New York City as well as the Northwest.

Williams Partners will also give its parent company about 203 million limited-partner units — valued at $6.3 billion based on Friday’s closing price. Williams Cos.’ stake in Williams Partners will grow from 24 percent to 80 percent.

The company expects Williams Partners will become a larger, diversified, master limited partnership with better access to debt and financial markets.

Williams is one of the biggest natural gas operations in the United States, producing enough gas for more than 4 million homes a day and transporting about 12 percent of the nation’s daily supply of natural gas.

The Associated Press contributed to the report.


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