Williams Partners L.P., which, through its subsidiary Utica Gas Services, currently owns 49 per cent equity interest in Utica East Ohio Midstream LLC (UEO), announced on Monday that it has agreed to acquire an additional 21 per cent equity interest in UEO from a subsidiary of EV Energy Partners, L.P. for approximately $575 million.
Once complete, Williams Partners will own a 70 per cent equity interest in UEO, a substantial natural gas midstream business in the Utica Shale in eastern Ohio. The gathering, processing, fractionation and storage assets are anchored by long-term, fee-based contracted commitments.
“Acquiring these cash-generating assets supports our strategy to grow our natural gas midstream position in key basins,” said Alan Armstrong, chief executive officer of the general partner of Williams Partners. “This fixed-fee business will be accretive to Williams Partners beginning in 2015 and the partnership has attractive growth opportunities as the Utica continues to develop.”
The other member of UEO has the right to acquire a portion of EV Energy Partners’ interests in UEO for the same price. If the other member exercises this right, Williams Partners would acquire an approximate 13 per cent interest and the other member would acquire an approximate 8 percent interest.
In connection with the acquisition of the additional 21 per cent interest, Williams has agreed to waive approximately $43 million of general partner incentive distribution rights for the three-year period 2015 through 2017. Williams Partners expects to finance the acquisition with a combination of equity and debt including revolver borrowings.
The agreement is subject to customary purchase price adjustments and closing conditions, including termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The transaction is expected to close by the middle of July 2015.
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