Willbros To Vend Mainline Pipeline Assets To Meridien Energy

Willbros Group, Inc. (NYSE:WG) recently agreed to divest some of its U.S. mainline pipeline assets to New York-based Meridien Energy, LLC's unit WB Pipeline, LLC to streamline its oil and gas operations. Following the news, the stock rallied more than 3%.

On the completion of the transaction, WB Pipeline will operate as Willbros Pipeline, a subsidiary of Meridien Energy. The move is in line with Willbros' strategy to reduce its risk profile in oil and gas operations in the United States. Notably, the energy infrastructure contractor recently completed the divestment of its U.S. tank construction and repair and maintenance business to Alliance Tank Service.

The deal will help the $82.2-million market cap company to reduce its debt burden. As of Sep 30, 2017, it has a total debt of $101 million and cash and cash equivalents of $31 million. The company has a debt to capitalization ratio of 53.9%.

The financial details of the transaction have been kept under wraps. The assets, Willbros is selling, mainly include cross-country pipeline construction equipment. Valuation of the assets will be based upon neutral third-party appraisals. Willbros will receive proceeds from the transaction through the first three months of 2018 and remains on track with other pipeline projects.

Few members of management will step down from their executive posts in Willbros and join WB Pipeline. Notably, the president of Willbros oil and gas segment, Harry New, has already joined WB Pipeline. Other members are expected to follow suit, upon the completion of the project.

About Willbros

Based in Houston, TX, Willbros is an independent contractor serving the oil, gas and power industries, providing construction, engineering and specialty services to industry and government entities worldwide. They place particular emphasis on projects in developing countries where they believe their experience gives them a competitive advantage.

Price Performance

Willbros has lost 55.2% over a year compared with the 16.6% fall of its industry.

Zacks Rank and Stocks to Consider

Willbros currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the oil and energy sector are Cabot Oil & Gas Corporation (NYSE:COG) , Royal Dutch Shell (LON:RDSa) plc RDS.A and Denbury Resources Inc. (NYSE:DNR) . All these companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX -based Cabot is an independent energy company. Its sales for the fourth quarter of 2017 are expected to grow 39% year over year. Earnings for the year 2017 are expected to be up 357.14%.

Shell, based in The Hague, the Netherlands, is an integrated energy company. Its earnings for 2017 are expected to increase 99.5% year over year. The company delivered a positive earnings surprise of 18.1% in the third quarter of 2017.

Plano, TX -based Denbury Resources is an integrated energy company. Its sales for the fourth quarter of 2017 are expected to increase 11.2% year over year. The company delivered a positive average earnings surprise of 125% in the last four quarters.

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