Williams signs two midstream deals worth more than $2bn

US-based natural gas processing and transportation firm Williams Companies has signed two separate strategic midstream agreements worth more than $2bn.

The deals will see the company make an entry into Colorado’s Denver-Julesburg (DJ) Basin and Williams Partners offloading its Four Corners Area (FCA) business in New Mexico and Colorado.

In the first transaction, Williams and KKR reached a $1.173bn deal to acquire Discovery DJ Services from TPG Growth.

Discovery provides natural gas and oil gathering, as well as natural gas processing services in the southern portion of the DJ Basin, serving producers drilling the Niobrara and Codell stacked-pay zones.

Once this transaction is completed this month, Williams and KKR will own the Discovery midstream business on 40:60 basis through a joint venture (JV). According to the terms of the JV, Williams will assume operatorship of Discovery.

Williams can increase its economic ownership to 50% by funding additional capital.

The assets being acquired include natural gas and crude oil gathering pipelines, cryogenic gas processing, liquids handling and crude oil storage and offer gas processing capacity of 60 million cubic feet per day (MMcf/d).

An additional 200MMcf/d plant is under construction and is expected to become operational by the end of this year.

The acquisition will also give the company 130 miles of natural gas pipeline, 260,000 acres for gas gathering and processing, as well as an additional 60,000 acres for oil gathering.

Williams president and CEO Alan Armstrong said: “This is a great opportunity to expand our asset footprint into a premium-growth basin and brings the benefits of the Williams capability suite to better serve producers in the DJ Basin.”

The second transaction involves the divestment of assets and equity comprising Williams Partners’ FCA business in New Mexico and Colorado to Harvest Midstream Company for $1.125bn.

Williams will use the proceeds from the sale to fund its portfolio of growth capital and investment expenditures.

The FCA assets being sold are located in San Juan and Rio Arriba Counties in New Mexico and in La Plata County in Colorado.

Under the terms of the transaction, Harvest will acquire 3,700 miles of pipeline, two gas processing plants, and one CO₂ treating facility.

The transaction involving the sale of FCA assets is anticipated to be closed in the second half of this year.