For Investors Only; How WMB / Access Mistream Will Benefit Investors

Updates

June 18, 2014: Tulsa World has this to say about the merger -- it's a big, big, big deal!

The approximately $6 billion purchase not only positions Williams as a major pipeline player in nearly all of the American shale plays, but could make Williams-controlled Williams Partners LP into the nation’s second largest energy infrastructure partnership after Kinder Morgan. The proposed merger of Oklahoma City-based Access and Williams Partners will need federal regulatory approval.

It cements Williams’ top stake as a pipeline and processing option in the gas-rich Marcellus Shale of the eastern U.S. Access also is strong in the Bakken, Haynesville, Eagle Ford and Oklahoma energy formations where producers are combining hydraulic fracturing and horizontal drilling to tap major reserves.

“It pushes Williams to the forefront of the competitors in the fracking business,” said Fred Russell, financial analyst and principal of Tulsa-based Fredric E. Russell Investment Management Co. “They (already) control 14 percent of the natural gas transmission through pipelines (nationally). This should increase their market position.” 

Original Post

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here.

I am surprised by two things:

• the very orderly melt-up of crude oil prices, and now seeming to hold steady
• the market eked out a positive story to end the day; futures are up

The big story of the day: WMB (up almost 20%) and WPZ (up 6%). It will be interesting to read an analyst's analysis later this week. I have some thoughts, but I'm not going to touch this one.

SRE hit another high. It should be noted that it was just announced today that Texas LNG was given a license to export up to 2 million tons of LNG annually.

HK was up almost 5% during regular trading hours, and held that gain going into after-hours trading. HK reported a huge gusher in the Bakken today.

But I think I'm going to call it a day. Go biking. It's starting to cool off. Have a great evening everyone. "See you" in the a.m.

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More Background On the WMB Deal

From Motley Fool:

Under the terms of the deal, Williams will pay nearly $6 billion in cash to acquire a 50% general partner, or GP, interest in Access, along with 55.1 million limited partner, or LP, units in the company. That means it will own 100% of the GP and 50% of the LP interests in the company, following a 2012 transaction in which it acquired a 50% GP interest and 23% LP interest in Access.

By acquiring full control of Access Midstream, Williams will further cement its leading position in the Marcellus shale, where it owns one of the largest and most important U.S. gas pipelines -- the Transco pipeline -- and gain greater exposure to a number of fast-growing plays in which Access operates, including the Barnett, Eagle Ford, Haynesville, Niobrara, and Utica shales.

It also means that Williams is entitled to an increasing share of Access' cash flow through GP/IDR (incentive distribution rights) and LP cash distributions. As a result, Williams' cash flow per share is expected to grow sharply over the next few years, allowing the company to deliver much stronger dividend growth to its shareholders.

Once the acquisition closes, expected in the third quarter of this year, Williams plans to boost its third-quarter dividend by 32% to $0.56 per share. The company expects to deliver 15% annual dividend growth through 2017, with planned annual dividends of approximately $1.96 per share this year, $2.46 in 2015, $2.82 in 2016, and $3.25 in 2017.