Williams, CPPIB form Marcellus-Utica midstream venture

March 20, 2019
Williams Cos. has entered into a long-term partnership with Canada Pension Plan Investment Board to establish a $3.8-billion joint venture that will include Williams’ wholly owned Ohio Valley Midstream system and 100% of the Utica East Ohio Midstream system. CPPIB will invest about $1.34 billion for a 35% ownership stake in the venture. Williams will retain 65% ownership, will operate the combined business, and will consolidate the financial results of the venture in Williams’ financial statements.

Williams Cos. Inc. has entered into a long-term partnership with Canada Pension Plan Investment Board (CPPIB) to establish a $3.8-billion joint venture that will include Williams’ wholly owned Ohio Valley Midstream system (OVM) and 100% of the Utica East Ohio Midstream system (UEO). CPPIB will invest about $1.34 billion for a 35% ownership stake in the joint venture. Williams will retain 65% ownership, will operate the combined business, and will consolidate the financial results of the venture in Williams’ financial statements.

The combine is designed to optimize Williams’ midstream operations in the western Marcellus and Utica basins. Williams purchased the remaining 38% stake in UEO from Momentum Midstream and will take over operatorship. Williams expects synergies through common ownership of UEO and OVM to create a more efficient platform for capital spending in the region, resulting in reduced operating and maintenance expenses and benefiting area producers.

The cash proceeds to Williams from the purchase by CPPIB of its 35% interest in the JV will be used to offset the purchase price of the UEO acquisition, with the balance of proceeds used to fund Williams’ growth-capital portfolio and reduce debt. Closing is expected by this year’s third quarter, subject to customary closing conditions and regulatory approvals.

The venture excludes Williams’ ownership interests in Flint Gathering, Cardinal Gathering, Marcellus South Gathering, Laurel Mountain Midstream, and Blue Racer Midstream.