Williams, CPPIB To Form $3.8-Billion Appalachia Midstream JV
Williams Companies and the Canada Pension Plan Investment Board (CPPIB) are forming a $3.8-billion joint venture (JV) that will operate midstream assets in the western Marcellus and Utica basins.
The JV will own 100% of the Ohio Valley Midstream system (OVM) and Utica East Ohio Midstream system (UEO). Williams currently owns 100% of the OVM and just closed on the purchase of the remaining 38% stake in UEO from Momentum Midstream.
CPPIB is contributing $1.34 billion, subject to closing adjustments, for a 35% stake in the combination. Williams will hold 65% and operate the JV. The deal is expected to close around mid-year.
The moves create “a platform for continued optimization and growth, provide deleveraging, reduce capital spending on processing and fractionation capacity for OVM, and unlock further synergies through combined operatorship of the systems,” said Alan Armstrong, Williams president and chief executive officer, in a news release.
CPPIB, Canada’s largest pension fund, financially backs Utica operator Encino Energy, which last year acquired Chesapeake Energy’s Utica assets for $2 billion. That deal gave Encino more than 900,000 net acres spanning the play’s condensate, liquids-rich, and dry gas windows along with 600 MMcf/D of gas equivalent production.
Encino is an anchor customer of UEO, which encompasses 1 Bcf/D of cryogenic gas processing capacity at the Kensington and Leesville plant sites, gas and NGL gathering lines, as well as fractionation, condensate stabilization, storage, and a rail and truck terminal. OVM includes a gathering system and processing facility, and construction is under way on fractionation and additional processing facilities.
“This joint venture will provide CPPIB additional exposure to the attractive North American natural gas market, aligning with our growing focus on energy transition,” said Avik Dey, CPPIB managing director and head of energy and resources. Encino entered the North American upstream sector in 2015 when it acquired Calgary-based Encana’s DJ Basin assets in Colorado.
Williams said it plans to use the cash it receives from CPPIB to offset the cost of the UEO acquisition. The JV excludes Williams’ ownership interests in Flint Gathering, Cardinal Gathering, Marcellus South Gathering, Laurel Mountain Midstream, and Blue Racer Midstream.
Joint Venture To Build Takeaway Capacity in the Permian
The pipeline system will have the initial capacity to deliver 150,000 B/D of crude oil to multiple delivery points, accessing local refineries and connecting to several downstream pipelines.
Camber Energy Eyes Acquisition of Pipeline Service and Construction Company
The independent oil and gas company is aiming to build shareholder value through a change in business focus to midstream with this step into pipeline service and construction.
Water Midstream Sector Positioned To Handle Rising Permian Volumes
A growing sector of water midstream companies is in the Permian Basin looking to take advantage of a business opportunity borne out of rising produced water volumes. Billion-dollar valuations for these companies in the near future could become a reality.
Don't miss out on the latest technology delivered to your email every two weeks. Sign up for the OGF newsletter. If you are not logged in, you will receive a confirmation email that you will need to click on to confirm you want to receive the newsletter.
05 April 2019
05 April 2019