Williams Partners To Acquire Further 21% Interest In Utica East Ohio Midstream

(RTTNews) - Williams Partners L.P. (WPZ) agreed Monday to acquire an additional 21 percent equity interest in Utica East Ohio Midstream LLC or UEO, from a subsidiary of EV Energy Partners, L.P. (EVEP) for about $575 million in cash. Williams Partners expects the fixed-fee business will be accretive to the company beginning in 2015. The deal is expected to close by the middle of July 2015.

"Acquiring these cash-generating assets supports our strategy to grow our natural gas midstream position in key basins. 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," said Alan Armstrong, CEO of the general partner of Williams Partners.

UEO is a joint project to develop infrastructure for the gathering, processing and fractionation of natural gas and natural gas liquids in the Utica Shale play in eastern Ohio.

Williams Partners already owns 49 percent equity interest in UEO through its subsidiary Utica Gas Services. Following the completion of the current deal, Williams Partners will own a 70 percent equity interest in UEO.

However, Williams Partners noted that 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 end up acquiring only about 13 percent interest, while the other member would acquire about 8 percent interest.

Williams Partners expects to fund the deal with a combination of equity and debt including revolver borrowings. The deal will also see Williams Partners waiving about $43 million of general partner incentive distribution rights for the three-year period 2015 through 2017.

Meanwhile, EV Energy Partners said it intends to initially use the net proceeds of the divestiture to repay all amounts outstanding under its revolving credit facility and the balance for future activities.

EV Energy may also use that availability under the revolving credit facility to fund future activities, including acquisitions of oil and natural gas properties.

"This transaction, along with the previous sale of our interest in Cardinal Gas Services, reflects the completion of our divestiture of midstream investments in the Utica Shale. We are pleased with the returns we achieved and look forward to participating in what we expect to be an attractive upstream A&D market in the second half of the year," EV Energy President and CEO Michael Mercer stated.

WPZ closed Friday's regular trading session at $48.76, down $0.11 on a volume of 1.17 million shares, and EVEP closed at $13.37, down $0.06 on a volume of 0.36 million shares.