Williams has reached an agreement to acquire a portfolio of natural gas storage assets from an affiliate of Hartree Partners LP for $1.95 billion, the company said Dec. 27.
The transaction includes six underground natural gas storage facilities in Louisiana and Mississippi with a total capacity of 115 Bcf, as well as 230 miles of gas transmission pipeline and 30 pipeline interconnects to attractive markets, including LNG markets, and connections to Transco, the nation’s largest natural gas transmission pipeline.
Williams said the business is “highly contracted” with a diverse customer base including investment-grade utilities, interstate pipelines, LNG terminals and natural gas marketers.
The acquisition price represents an approximate 10x estimated 2024 EBITDA multiple.
The six gas storage facilities include four salt domes with a combined capacity of 92 Bcf and two depleted reservoirs with a combined capacity of 23 Bcf.
The facilities have injection capacity of 5 Bcf/d and withdrawal capacity of 7.9 Bcf/d, among the highest of any natural gas storage platform in the U.S.
Two of the facilities, Pine Prairie and Southern Pines, are directly connected with Transco and are well-positioned for expansions, Williams said in a press release.
“This premier natural gas storage platform on the Gulf Coast fits squarely within our strategy to own and operate the best assets connected to the best markets to serve growing demand driven by LNG exports and power generation,” said Williams President and CEO Alan Armstrong. “These assets better position Williams’ natural gas storage operations to serve Gulf Coast LNG demand and growing electrification loads from data centers along the Transco corridor.”
Armstrong said the storage will also allow the company to provide value to customers in markets with growing renewables adoption as daily peaks for natural gas increase the need for storage.
Since 2010, U.S. demand for natural gas has grown by 56% while gas storage capacity has disproportionately increased by only 12%, he said.
“We expect the increasing demand for high deliverability storage to drive significant earnings growth across these assets,” Armstrong said.
The transaction is expected to close in January 2024, following customary closing conditions, including the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
BofA Securities served as financial adviser to Williams; Davis Polk & Wardwell LLP served as legal adviser to Williams.
Evercore served as lead financial adviser and Wells Fargo Securities, LLC served as financial advisor to Hartree; Milbank LLP served as legal adviser to Hartree.