Reuters: Private Equity: UPDATE 1-Williams buying infrastructure in Marcellus shale

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UPDATE 1-Williams buying infrastructure in Marcellus shale Mar 19th 2012, 21:23 Mon Mar 19, 2012 5:23pm EDT * Deal funded with cash and common units * Utica JV also planned March 19 (Reuters) - Williams Cos Inc struck a $2.5 billion deal to buy a natural gas gathering and processing business in the Marcellus shale, increasing its exposure to the boom in liquids-rich natural gas. Soaring supplies of natural gas in the United States have pushed prices for the fuel to their lowest in a decade. In response, exploration and production companies have increased output of crude oil and natural gas that can be stripped of fuels like propane that fetch higher prices. Williams is buying the Caiman Eastern Midstream business, a unit of privately held Caiman Energy, through its master limited partnership, Williams Partners LP. Williams owns 72 percent of Williams Partners, as well as the partnership's general partner. Williams Partners plans to fund the purchase price of the acquisition with a $1.78 billion in cash and the issuance to Caiman of about 11.8 million Williams Partners common units valued at about $720 million. The partnership expects the Caiman system to gather more than 2 billion cubic feet per day (Bcf/d) and produce about 300,000 barrels per day (bbl/d) of natural gas liquids by 2020, Williams said. Caiman Energy is backed by private equity investors including EnCap Investments LP and Highstar Capital. The midstream unit is located in northern West Virginia, southwestern Pennsylvania and eastern Ohio. The existing physical assets Williams is buying include a gathering system, two processing facilities and a fractionator, the company said. There are also planned expansions to the system currently under construction. Williams Partners is also planning to launch a joint venture with Caiman Energy to develop oil and gas infrastructure in the Utica shale, primarily in Ohio and northwest Pennsylvania. The Utica shale lies several thousand feet beneath the Marcellus shale. Jefferies and UBS Investment Bank advised Williams on the deal, while Barclays and Citigroup acted as financial advisers to Caiman. Link this Share this Digg this Email Reprints

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