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The Williams Companies Inc. has closed two acquisitions in the Denver-Julesberg Basin, which the company said makes it the third-largest gatherer in the basin.
Williams has closed the acquisition of Cureton Front Range LLC, whose assets include gas gathering pipelines and two processing plants serving producers across 225,500 dedicated acres. Williams has also closed the purchase of KKR’s 50 percent ownership interest in Rocky Mountain Midstream Holdings LLC (RMM), resulting in 100 percent ownership of RMM for Williams.
“We remain committed to executing on acquisitions that progress our overall strategy to maintain top positions in the basins we serve”, Williams President and CEO Alan Armstrong said. “The combination of the Cureton and RMM assets will deliver tangible operational synergies that include increased volumes on our existing processing facilities, as well as increased revenues on our downstream NGL [natural gas liquids] transportation, fractionation and storage assets”.
In November, Williams Field Services Group, LLC, a subsidiary of The Williams Companies, Inc., announced the acquisition of Cureton Front Range LLC, a Denver-based, growth-oriented midstream company focused on providing commercial solutions to oil and gas producers in the DJ Basin. Cureton’s asset base consists of over 260 miles of low- and high-pressure pipelines, 109 million cubic feet per day (MMcfpd) of natural gas processing capacity, and 64,000 horsepower of compression. The assets are underpinned by long-term contracts with blue-chip operators covering more than 200,000 dedicated acres and over two million acres of areas of mutual interest.
Cureton’s flagship processing facility, the Front Range Gas Plant, started operations in December 2018 with more than 60 million standard cubic feet per day (mmscfd) of cryogenic processing and a stabilizer capacity of 5,000 barrels per day, according to the company’s website. The facility has more than 3,000 horsepower of refrigeration compression and more than 7,500 horsepower of residue compression. It also uses an advanced cycle recycle split vapor process to recover NGLs to drive additional value to Cureton’s customers and independent gas producers.
In October, Williams entered into an agreement to acquire the remaining 50 percent stake in Rocky Mountain Midstream LLC from Kohlberg Kravis Roberts & Co. L.P. (NYSE:KKR) for approximately $710 million.
The acquisitions of Cureton and RMM have a combined value of $1.27 billion, representing a blended multiple of approximately 7x 2024 Adjusted EBITDA, Williams said. Proceeds of $355 million from the company’s recent sale of its Bayou Ethane Pipeline system along with $533 million in net proceeds received from the Energy Transfer legal judgment of $627 million partially funded the transactions, Williams noted.
Third-Quarter Profit Up
Earlier, Williams reported third-quarter net income of $654 million, compared to $599 million in the prior-year period. The increase reflected a $130 million gain on the sale of the Bayou Ethane system and “the benefit of higher service revenues driven by contributions from recent acquisitions and increased volumes and rates in the Northeast G&P segment”, Williams said in an earlier earnings release. “The improvements were partially offset by our $31 million share of a loss contingency accrual on our Aux Sable equity-method investment and lower results from our upstream business reflecting lower prices partially offset by higher production volumes, and higher operating expenses”, the company added.
“Williams delivered another quarter of impressive accomplishments with Adjusted EBITDA up 9 percent year-to-date 2023, despite dramatically lower natural gas prices. We expect the strong performance to continue, providing confidence to raise our guidance midpoint by $100 million to $6.7 billion Adjusted EBITDA for 2023”, Williams President and CEO Alan Armstrong said.
“Our teams have done an excellent job executing our large-scale expansion projects in a complex and challenging permitting environment”, Armstrong continued. “We placed the first phase of our latest Transco expansion project, Regional Energy Access, into service ahead of schedule, progressed on an additional 2 Bcf/d of Transco expansions for completion by year-end 2025, and executed precedent agreements on the 1.4 Bcf/d Southeast Supply Enhancement project. Our teams also successfully integrated MountainWest into our operations and are executing on more profitable growth with this asset than we had planned. Additionally, we have once again optimized our portfolio, using proceeds from the sale of non-core assets, along with expected proceeds from a recent legal judgement, to strengthen our position and capture tangible synergies in the DJ Basin.”
“Williams has proven its ability to predictably grow through a variety of commodity cycles, and our natural gas strategy is more relevant than ever as demand for natural gas continues to increase, especially to serve electric power generation and LNG [liquefied natural gas] exports. Williams is well positioned to capture significant future growth and return value to our shareholders, while we reliably deliver the benefits of natural gas to the United States and abroad”, Armstrong concluded.
To contact the author, email rocky.teodoro@rigzone.com
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