US-based midstream company Williams has agreed to acquire the gathering and processing assets in the Haynesville shale region, in the US, from Trace Midstream in a deal worth $950m.
The Haynesville assets of Trace Midstream, a portfolio company of Quantum Energy Partners, includes the Gemini Carthage pipeline (GCP) system, the Endeavor gathering system, and the Star gathering system.
Williams expects the acquisition to increase its gathering capacity in the Haynesville basin to more than four billion cubic feet (Bcf), up from its current 1.8Bcf.
The firm said in a statement: “The acquisition is expected to result in an investment at approximately six times 2023 EBITDA, with strong growth anticipated and minimal expansion capital required, thereby supporting Williams’ strong credit metrics.”
Trace Midstream CEO Josh Weber said: “Over the past four years, we have positioned ourselves in one of the most prolific resource plays in the country to transport responsibly sourced natural gas to premium markets along the Texas and Louisiana Gulf Coast.”
As part of the deal, Rockcliff Energy, which is a customer of Trace Midstream and an affiliate of Quantum Energy Partners, has agreed to support Williams’ Louisiana Energy Gateway (LEG) project through a long-term capacity commitment.
The LEG project can gather natural gas produced in the Haynesville. The gathered gas will then be transported to premium markets, including Transco, and LNG exports.
Williams and Quantum have agreed to create a joint venture (JV), allowing the latter to become an equity investor and partner in the LEG midstream project.
Williams president and CEO Alan Armstrong said: “Williams continues to increase scale and connectivity in the best and most efficient natural gas basins, and these transactions with Trace, Rockcliff, and Quantum represent an important extension of our natural gas-focused strategy.
“Importantly, this is going to be the flagship of our low carbon wellhead to water venture, proving up what an important role natural gas can play in reducing emissions, lowering costs, and providing secure reliable energy here, and around the world.”
Subject to regulatory approvals, the deal is expected to be completed in Q2 2022.
Last year, Williams signed an agreement with Chevron USA, and Shell Offshore, to provide services for the Whale deepwater project, in the Gulf of Mexico.