The Williams Companies, Inc. (NYSE:WMB) recently agreed to form a joint venture (JV) with Brazos Midstream, a private company in the Delaware Basin, which is part of the prolific Permian Basin. The JV will receive all of Williams’ existing assets in the region, for which the company is expected to get 15% minority stake in the partnership in return. With Permian bottlenecks choking producers in the region, this deal will enable the JV to provide its clients with a wide range of services, easing the situation to some extent.
Assets Under the JV
Per the deal, Brazos will be the operator of gas gathering pipelines of 725 miles, having 260 million cubic feet per day (MMcf/d) of gas processing capacity, crude oil gathering pipelines of 75 miles and crude storage of 75,000 barrels in the region. Moreover, the Comanche III natural gas processing plant, being built by Brazos with a capacity of 200 MMcf/d and expected to come online by the first quarter of 2019, is likely to boost the JV’s total processing capacity to 460 MMcf/d in the region. The JV will have more than 500,000 dedicated acres from producers. The JV will also develop natural gas residue solutions to further benefit the producers in the basin.
William’s Gain
The JV enhances Williams’ exposure in the basin and equips its operations with increased capacity of processing. Along with the synergies, the JV is expected to unlock tremendous value for the company and enhance the quality of service it provides to its clients.
The move is also expected to improve the company’s credit metrics without affecting its guidance. The company includes its Delaware Basin operations in the West segment, which delivered adjusted EBITDA of $424 million in the last reported quarter, nominally lower than $426 million recorded in the year-ago quarter.
Price Performance
Tulsa, OK-based Williams has lost 7.5% in the past year compared with 8.5% fall of the industry it belongs to.
Zacks Rank & Key Picks
The company currently has a Zacks Rank #3 (Hold). Investors interested in the energy sector can opt for some better-ranked stocks given below:
New York, NY-based Hess Corporation (NYSE:HES) has a Zacks Rank #1 (Strong Buy). Its earnings for 2018 are expected to surge around 100% from the 2017 level. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fort Worth, TX-based Range Resources Corporation (NYSE:RRC) holds a Zacks Rank #2 (Buy). The company’s earnings for 2018 are expected to surge more than 100% year over year.
El Dorado, AR-based Murphy Oil Corporation (NYSE:MUR) carries a Zacks Rank #2. The company’s sales for 2018 are expected to grow more than 20% from 2017.
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Williams Companies, Inc. (The) (WMB): Free Stock Analysis Report
Range Resources Corporation (RRC): Free Stock Analysis Report
Hess Corporation (HES): Free Stock Analysis Report
Murphy Oil Corporation (MUR): Free Stock Analysis Report
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