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(Bloomberg) — Williams Cos. reached a deal to buy Momentum Midstream LLC from the private equity firm EnCap Flatrock Midstream through a deal valued up to $5.5 billion, expanding its natural gas network along the US Gulf Coast.
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Williams will pay $3.5 billion in cash and debt consideration and about $2 billion in stock for the company, according to a statement Monday.
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The acquisition is one of the largest for Williams and adds to its already dominant position in the prolific Haynesville shale region of East Texas and northern Louisiana. Pipeline operators in the US have been seeking to supply a wave of liquefied natural gas export terminals being constructed amid a global boom in demand.
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Houston-based Momentum Midstream operates 4,000 miles (6,400 kilometers) of pipelines with a capacity of 6 billion cubic feet of gas a day connecting the Haynesville to LNG facilities, power plants and industrial customers along the Gulf Coast.
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Shares of Williams, which reported second-quarter results Monday that beat analysts’ expectations, rose about 1.9% after the close of regular trading in New York.
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Bloomberg reported in June that Williams was in advanced talks to acquire Momentum Midstream.
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Despite President Donald Trump’s push to expand US energy infrastructure, building new pipelines remains fraught with legal challenges and a lengthy federal permitting process. Those obstacles have made acquisitions an increasingly attractive way for pipeline operators to expand their networks.
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Williams, which already owns more than 30,000 miles of pipeline infrastructure, will add capacity to move gas from the Haynesville to export terminals on the US Gulf Coast through the deal to buy Momentum.
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The US, already the world’s top liquefied natural gas exporter, is expected to roughly double its international shipments by the end of the decade after a wave of new terminals enter service in Texas and Louisiana.
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As those massive, geopolitically strategic facilities are built, they will put increasing pressure on the pipelines shipping gas from the Haynesville, which is the nearest major gas-producing basin to Gulf.
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BofA Securities was Williams’ lead financial advisor. Davis Polk & Wardwell was the company’s legal advisor on the deal.
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—With assistance from Stella Mackler.
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(Adds shares movement in the fifth paragraph and the advisor in the final paragraph.)
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English (US)