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Williams and Brazos Midstream agree to enter into a joint venture

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World Pipelines,

Williams and Brazos Midstream have announced that they have agreed to enter into a joint venture (the ‘Partnership’) in the Delaware Basin. Under terms of the agreement, Williams will contribute its existing Delaware Basin assets to the Partnership, in exchange for a 15% minority position in the joint venture. The contribution of the Williams assets will expand the footprint of the current Brazos system and the combined capabilities of the Partnership will provide existing and prospective customers with an enhanced suite of services.

Brazos – with an 85% ownership in the joint venture – will operate pro-forma 725 miles of gas gathering pipelines, 260 million ft3/d of natural gas processing, 75 miles of crude oil gathering pipelines, and 75 000 bbls of oil storage, located across Reeves, Loving, Ward, Winkler, Pecos, and Culberson counties in Texas. In addition, Brazos is currently constructing its previously announced 200 million ft3/d Comanche III natural gas processing plant to be fully operational by 1Q19, bringing the Partnership’s total operated processing capacity in the Delaware Basin to 460 million ft3/d. The joint venture will be supported by over 500 000 acres of long-term dedications currently under full-field horizontal development from leading major and independent oil and gas producers.

As part of the transaction, Williams and Brazos have also entered into an agreement to jointly develop natural gas residue solutions to further benefit Delaware Basin producers.

“This joint venture increases our scale in the Delaware Basin, including a much larger footprint, new processing capabilities, and greater exposure to an impressive customer base,” said Williams Senior Vice President for Corporate Strategic Development, Chad Zamarin. “We are pleased to partner with Brazos Midstream on this joint venture. Their high-quality gathering pipelines and processing assets, combined with their industry-leading capabilities in Reeves, Ward, and Pecos counties are an excellent match for the gathering systems and additional capabilities that Williams is contributing as part of this transaction. With the residue gas position that we will establish together with Brazos, we unlock additional opportunities for value, as growing Permian natural gas supply increasingly needs access to high-value demand markets, including premium Gulf Coast markets served by our Transco system, the nation’s largest pipeline system by volume.”

“Brazos operates a strategically-located midstream platform in a region that has seen tremendous production growth,” said Brazos Chief Executive Officer, Brad Iles. “This year we have continued to expand our asset base in co-operation with our new sponsor, Morgan Stanley Infrastructure Partners, in order to provide exceptional service to our producer customers.”

Iles continued, “We are excited to form this joint venture with Williams and greatly appreciate the confidence they have in Brazos to entrust us with operatorship of their assets and stewardship of their customers. Williams is well-known as one of the nation’s premier natural gas midstream companies, and we believe this partnership will greatly enhance both companies’ efforts to develop top-tier assets in the Permian Basin.”

Williams President and Chief Executive Officer, Alan Armstrong added, “This transaction is another example of high-grading our portfolio by leveraging an existing asset into a larger integrated system with better growth, in a manner that improves our credit metrics over time.”

RBC Capital Markets acted as the lead financial adviser to Williams for this transaction.

The announcement does not affect Williams’ current financial guidance.

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