Williams & Chesapeake Energy Execute Expansion of Gas Gathering Services & Acreage Dedication in the Dry Utica, Consolidate H...
September 08 2015 - 7:00AM
Business Wire
- Win-Win Contract Restructure Aligns
Interests of Both Companies, Optimizes Production
Opportunities
Williams (NYSE:WMB) today announced an expansion of gas
gathering services for Chesapeake Energy (NYSE:CHK) in growing dry
gas production areas of the Utica Shale in eastern Ohio and a
consolidation of contracts in the Haynesville Shale in northwestern
Louisiana to optimize production opportunities, streamline fee
structures and restructure commitments to incentivize long-term
development of the fields. The agreements with Chesapeake were
entered into by subsidiaries of Williams Partners L.P. (NYSE:WPZ),
of which Williams own 60 percent, including the general partner
interest.
“This demonstrates our commitment to working with Chesapeake to
align our interests on mutual growth while sustaining the financial
support of our investments,” said Alan Armstrong, chief executive
officer of Williams. “These new fee structures are designed to
promote production in the best locations across a wider footprint
in these great basins, which improves the economics on both the
drilling and midstream side. We’ve also increased certainty around
fees and volumes to support our strategy of creating long-term,
durable value for shareholders.”
In the Utica, Williams and Chesapeake executed a long-term,
fee-based contract that gained a new area of dedication in the dry
gas zone where Chesapeake and others are targeting production
growth. The agreement extends the length of the Chesapeake acreage
dedication to 2035, increases the area of dedication by 50,000
acres from 140,000 acres to 190,000 net acres in a strategic area
adjacent to Williams’ existing assets and converts the
cost-of-service mechanism to a fixed-fee structure with minimum
volume commitments (MVCs). This change to a fixed-fee contract
enhances Williams’ ability to gather third-party volumes and build
scale in Utica’s dry gas areas. Williams expects this will provide
the opportunity to invest more than $600 million over five years to
install more than 200 miles of pipeline and related facilities as
this prolific area of the basin grows with up to 800 million cubic
feet per day of capacity to serve the development.
The companies also executed a new Haynesville contract that
consolidates the Springridge and Mansfield contracts into a single
agreement with a fixed-fee structure and a contract term to 2035.
The consolidated contract is supported by MVCs and a drilling
commitment to turn 140 equivalent wells online before the end of
2017. This commitment is projected to result in significant
production growth in the Haynesville Shale asset over the next two
years. The combined contract also better aligns producer-midstream
interests, simplifies contract administration, optimizes
development of the resource across both Springridge and Mansfield
areas and extends the Springridge dedication 15 years to 2035.
Williams expects positive impact to EBITDA in both the Utica and
the Haynesville areas due to near-term higher volumes and drilling
commitments.
About Williams
Williams (NYSE: WMB) is a premier provider of large-scale
infrastructure connecting North American natural gas and natural
gas products to growing demand for cleaner fuel and feedstocks.
Headquartered in Tulsa, Okla., Williams owns approximately 60
percent of Williams Partners L.P. (NYSE: WPZ), including all of the
2 percent general-partner interest. Williams Partners is an
industry-leading, large-cap master limited partnership with
operations across the natural gas value chain from gathering,
processing and interstate transportation of natural gas and natural
gas liquids to petchem production of ethylene, propylene and other
olefins. With major positions in top U.S. supply basins and also in
Canada, Williams Partners owns and operates more than 33,000 miles
of pipelines system wide – including the nation’s largest volume
and fastest growing pipeline – providing natural gas for
clean-power generation, heating and industrial use. Williams
Partners’ operations touch approximately 30 percent of U.S. natural
gas. www.williams.com
Portions of this document may constitute “forward-looking
statements” as defined by federal law. Although the company
believes any such statements are based on reasonable assumptions,
there is no assurance that actual outcomes will not be materially
different. Any such statements are made in reliance on the “safe
harbor” protections provided under the Private Securities Reform
Act of 1995. Additional information about issues that could lead to
material changes in performance is contained in the company’s
annual reports filed with the Securities and Exchange
Commission.
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WilliamsMedia Contact:Tom Droege,
918-573-4034orInvestor Contacts:John Porter,
918-573-0797orBrett Krieg, 918-573-4614
Williams Partners (NYSE:WPZ)
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