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Williams Co. To Acquire Caiman Energy Unit For $2.5 Bln.

Energy infrastructure company Williams Co. Inc. (WMB: Quote), Monday said it has agreed to buy Caiman Eastern Midstream LLC from privately held Caiman Energy for about $2.5 billion.

Caiman Eastern Midstream will be acquired by Williams unit, Williams Partners L.P. (WPZ), in an effort to gain a strong footprint and tap growth in the Marcellus Shale region. Caiman Eastern Midstream runs gathering and processing businesses located in northern West Virginia, southwestern Pennsylvania and eastern Ohio.

Williams Partners will fund the acquisition with $1.78 billion in cash and the issuance to Caiman of about 11.8 million of its common units valued at about $720 million.

Williams Co. also raised its dividend payment and updated earnings outlook for 2012-2013 to mainly reflect the acquisition of Caiman Eastern Midstream.

William Partners expects the Caiman system to gather more than 2 billion cubic feet per day and produce about 300,000 barrels per day of NGLs and condensate by 2020.

Meanwhile, Williams Co. plans an additional investment in Williams Partners of about $1 billion to assist in the Caiman acquisition, and in return plans to purchase about 16.3 million William Partners limited-partner units.

Williams expects to fund its additional equity investment in Williams Partners with a combination of public equity, debt and available cash.

Williams anticipates the'Caiman acquisition to be strongly accretive to cash flow and earnings per share in 2014 and beyond. It expects receive cash distributions of about $1.5 billion from Williams Partners in 2014.

Jefferies and UBS Investment Bank were the financial advisors to Williams Partners, with Gibson Dunn as legal counsel.

Williams Partners also revealed plans for a new joint venture with Caiman Energy to develop midstream infrastructure in the NGL- and oil-rich areas of the Utica Shale.

Detailing its new guidance, Williams said it now expects 2012 adjusted earnings in the range of of $1.15 to $1.55 per share, compared to its prior outlook of $1.15 to $1.60 per share.

Analysts polled by Thomson Reuters currently expect earnings of $1.49 per share for 2012. Analysts' estimates typically exclude special items.

Williams now expects 2013 adjusted earnings of $1.35 to $1.75 per share, compared to its prior outlook of $1.30 to $1.80 per share. Analysts currently expect $1.66 per share for the year.

For 2014, Williams anticipates earnings in the range of $1.55 to $2.05 per share.

Williams raised its 2012 dividend from $1.09 per share to $1.20 per share. The company plans to increase dividend by 20 percent in both 2013 and 2014.

WMB closed Monday on the NYSE at $30.00, down $0.46 or 1.51%, on a volume of 2.75 million shares. In after hours, the stock gained $1.00 or 3.33%.

WPZ closed at $61.06, up $0.53 or 0.88%. In after hours, the stock gained $0.43 or 0.70%.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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