Addressing The Williams Chesapeake Exposure
Wed, Aug. 10, 5:28 PM
- Chesapeake Energy (NYSE:CHK) agrees to sell its interests in the Barnett shale in north Texas - the birthplace of the shale revolution - to Saddle Barnett Resources.
- CHK says leaving the gas fields will cut shipping and processing costs by $715M by the end of 2017, eliminate ~$1.9B in long-term pipeline agreements, increase operating income through 2019 by $200M-$300M annually, and increase the PV-10 of its proved reserves by ~$550M.
- As part of the deal, CHK will pay $334M to Williams Partners (NYSE:WPZ) to end their current gathering agreement, projected MVC shortfall payments and fees pertaining to the Barnett Shale assets, with Saddle Resources also expected to pay an unspecified additional sum.
- CHK also renegotiates its existing cost-of-service gas gathering agreement with WPZ covering the Mid-Continent operating area to a fixed-fee arrangement, which CHK says should reduce its Mid-Continent gas gathering costs by 36%.
- The Barnett deal includes ~215K net developed and undeveloped acres and ~2,800 operated wells.
- CHK +5.2% AH, WPZ -0.2%.
Tue, Aug. 2, 3:33 PM
Mon, Aug. 1, 5:40 PM
- Williams Cos. (WMB -6%) has picked up 4.1% after hours as its Q2 earnings report brings confirmation of a dividend cut to be used to invest in pipeline unit Williams Partners (WPZ, itself up 2.1% after hours).
- The company cut its quarterly cash dividend to $0.20/share from its previous $0.64, starting with Q3, saying it expects to resume increases in 2018.
- Williams swung to a net loss (unaudited) of $405M after taking a $747M pretax impairment charge tied to Canadian operations held for sale.
- Williams will reinvest about $1.7B into Williams Partners through 2017, funded by a distribution reinvestment program. That begins with $500M in investment in 2016 ($250M in Q3 via private purchase and the balance in Q4 via the DRIP).
- Another $1.2B will be reinvested in WPZ in 2017 via the DRIP.
- Press Release
Thu, Jul. 14, 2:52 PM
- Williams Cos. (WMB +5.6%) moves sharply higher following a Reuters report that it has received at least seven bids for its Canada unit, in a potential sale that could fetch $1B-$2B.
- Interest has come from pipeline companies Enbridge (ENB -0.4%), Pembina (PBA +0.5%), Keyera (OTC:KEYUF) and Inter Pipeline (OTCPK:IPPLF), as well as three Canadian pension plans, and an unspecified number of U.S. companies, according to the report.
- The sale process reportedly is at an advanced stage, and a deal could result by the end of the month; interest is said to be strong, highlighting demand for midstream assets that offer a steady cash flow despite volatile oil prices.
- Also: WPZ +3.3%, EEP +0.1%.
Mon, Jun. 27, 8:32 AM
- Williams Cos. (NYSE:WMB) -6.6% premarket after Friday's court ruling likely ends the merger with Energy Transfer Equity (NYSE:ETE).
- Ahead of a shareholder meeting today, WMB continues to ask its shareholders to vote in favor of the deal, and WSJ reports it is considering appealing the ruling, and could sue ETE for damages if it loses that appeal.
- Assuming the merger does not work out, WMB must decide what sort of company it wants to be; former CEO Keith Bailey believes the company should go back to basics - “steady growth over time.”
- WMB already has telegraphed one move: Earlier this month, it said it may have to cut its $0.64 quarterly dividend by a “material” amount, perhaps by as much as 60%, says Evercore ISI's Timm Schneider.
- But WMB still has plenty going for it, with the assets - a vast network of pipes in the Marcellus shale formation and the 10k-mile Transco pipeline - that made it so appealing to ETE in the first place, and it could revisit a plan to buy its Williams Partners (NYSE:WPZ) MLP or entertain offers from another buyer.
- ETE +7.7% premarket.
Fri, May 13, 5:52 PM
- David Tepper and Appaloosa have filed their 13F, and while it shows new positions in Valeant (NYSE:VRX), Bank of America (NYSE:BAC), Facebook (NASDAQ:FB) and Fox (FOX, FOXA), a source told CNBC that he's already sold that Valeant stake.
- Shares in Valeant moved accordingly after the release: First up as much as 2.9% after hours, then back again to a 0.6% gain.
- Meanwhile, the firm notes dissolved stakes in Apple (AAPL, sold 1.26M shares), HP Enterprise (HPE, sold 3.66M shares) and Eastman Chemical (EMN, sold 700K shares).
- In energy bets, Tepper heavily increased stakes in Williams Partners (WPZ, +10.87M shares) and Energy Transfer Partners (ETP, +11M shares), while cutting a stake in Kinder Morgan (NYSE:KMI) by 4.95M shares.
Thu, May 5, 12:38 PM
- "We can't close this deal," Energy Transfer Equity (ETE +6.4%) CEO Kelcy Warren says of the takeover of Williams Cos. (WMB +3.9%) without the tax opinion that would deem the transaction an exchange that frees shareholders from tax liabilities.
- "Absent a substantial restructuring of this transaction, which Energy Transfer has been very willing and actually desiring to do, absent that, we don't have a deal," Warren said in today's earnings conference call, adding that ETE would be open to a deal that would remove the cash portion of its cash-and-stock bid for WMB.
- ETE general counsel Thomas Mason said on the call that adviser Latham & Watkins had looked for a solution to the tax problem but had failed to find one, and legal advisers reached the same conclusion; he said either party could walk away from the deal after a June 28 deadline, but that ETE is "not focused" on that right now.
- Also: ETP +8.9%, WPZ +3.4%.
- Now read Energy Transfer nixes Williams proposals to resolve tax issues
Tue, Apr. 19, 12:34 PM
- Research firm CreditSights thinks now is "a great entry point" to buy Williams Partners (WPZ +4.9%) bonds even as the merger plans of parent company Williams Cos. (WMB +4.2%) and Energy Transfer Equity (ETE +5.4%) appear to become more remote.
- CreditSights upgrades WPZ bonds to Outperform from Market Perform, liking the bonds whether or not the merger closes and believing that WMB has the balance sheet and the incentive to keep its MLP subsidiary investment grade; if the merger does go through, the firm says the just-filed S4 on the deal gives new disclosure that ETE will eliminate its dividend entirely in order to support investment grade ratings at Energy Transfer Partners (ETP +2.8%) and WPZ.
- The firm believes ETE is hoping WMB shareholders will vote against the merger, and that recent negative disclosures are part of that effort.
- Now read Williams is worth owning even if the Energy Transfer Equity merger fails
Mon, Apr. 18, 3:12 PM
- Energy Transfer Equity (ETE +9.5%) discloses that its lawyers may not be able to deliver a tax opinion for its takeover of rival Williams Cos. (WMB -4.6%).
- ETE and WMB need a “721 Opinion” to complete their merger, and the law firm has told ETE that it be unable to deliver the opinion if the deal’s closing were to occur at the present date, according to an SEC filing.
- ETE says in the filing that WMB disagrees with its position on the tax issue, and that the two companies are in talks on the impact this could have on the closing of the deal.
- Related tickers: ETP +4.3%, WPZ -2.9%.
- Now read Energy Transfer Equity's merger with Williams is crumbling
Wed, Apr. 6, 9:59 AM
- Williams Companies (WMB +0.5%) says it is suing Energy Transfer Equity (ETE +3.7%) and Chairman Kelcy Warren to block a private preferred share offering disclosed last month, saying it was a breach of their merger agreement and provides certain ETE investors preferential treatment on its distributions.
- ETE issued convertible units to certain investors, including Warren, last month to raise funds to help cover the $6B it will owe WMB investors when the deal closes.
- WMB says it has commenced litigation to protect the interests of its stockholders while remaining committed to working with ETE to ensure the financial strength of the combined company.
- ETP +3.3%, WPZ +2.3%.
- Now read Energy Transfer Partners cut to Hold at Stifel, citing "looming challenges"
Mon, Apr. 4, 10:49 AM
- Energy Transfer Partners (ETP -2.6%) is downgraded to Hold from Buy at Stifel, which says ETP's valuation seems high given the looming challenges associated with the merger of Energy Transfer Equity (ETE -2%) and Williams (WMB, WPZ).
- Stifel also continues to assume ETP will require $500M of equity capital to complete its 2016 budget, which it believes is another reason to be cautious.
- Current multiples do not appear excessive, given ETP's diversified largely fee-based assets, but the firm expects near-term challenges that may limit further expansion.
- Stifel also believes ETP's distribution is secure and the 13.4% yield is attractive, but near-term challenges may limit price appreciation.
- Now read Energy Transfer Partners can sail through this storm without cutting dividends
Thu, Mar. 24, 11:16 AM
- Energy Transfer Equity (ETE -4.9%) drastically cuts expectations for its takeover of Williams Cos. (WMB -7.2%), due in part to lower oil prices and the increased cost of capital.
- ETE now says it expects the base case for EBITDA from commercial synergies from the deal to total ~$170M/year by 2020, compared with previous forecasts of more than $2B; EBITDA from commercial synergies could total ~$590M/year if oil prices recovery to the $53.97-$64.26/bbl range in 2020, but that still would be far below previous forecasts.
- ETE also says it plans to grant awards under a long-term incentive plan that will dilute WMB stockholders' position in Energy Transfer Corp., the vehicle ETE is launching to buy WMB; the company also says it likely would need to significantly reduce its presence in WMB's home state of Oklahoma.
- Also: ETP -1.3%, WPZ -4.4%.
Mon, Mar. 14, 10:58 AM
- Williams Cos. (WMB -0.9%) says it remains committed to closing its merger with Energy Transfer Equity (ETE +2.4%) and expects the deal will be completed in H1 of this year.
- According to an SEC filing, WMB CEO Alan Armstrong, responding to a question in a town hall meeting, said the "shortest case scenario" for a required vote of WMB shareholders on the deal could be around April 20.
- Armstrong also said that on "a standalone basis, we'd be healthy and thriving and continue to do the very best in the circumstances."
- Regarding the possibility of reopening its deal to acquire affiliate Williams Partners (WPZ -1.8%), Armstrong said it is "very hard to say exactly how that would roll out at this point, just given how unsettled the capital markets are."
- Earlier: Reuters: Energy Transfer has held talks to sell Sunoco (Mar. 11)
Thu, Mar. 10, 2:39 PM
- Williams Cos. (WMB -9.3%) shares have dropped as much as 17% today thanks to Energy Transfer Equity's (ETE -6.8%) dilutive effort to raise cash to help fund its $14B-plus takeover of the company.
- ETE disclosed the private offering in a filing after yesterday's close and said it had intended to offer the units to all of its shareholders, but WMB would not give its consent.
- WMB says it has offered to work with ETE to find a solution to financing a deal that is more beneficial for both companies’ investors, and remains open to working collaboratively to improve the financial profile of both companies.
- The spread between WMB's share price and the per share value of ETE's bid for WMB also widened significantly to ~19%, suggesting investor skepticism that the companies would be able to close the deal.
- WPZ -2.4%, ETP -0.1%.
Fri, Feb. 26, 10:58 AM
- CNBC's David Faber reports that Energy Transfer Equity (ETE +2.5%) likely will take the Williams (WMB +1.2%) merger proposal to a shareholder vote, and says his sources indicate there has not been any conversation or contemplation of paying $2B to get out of deal.
- Faber notes that the merger contract is so tight that it will be very difficult for ETE to get out.
- A NY Times article yesterday said ETE had considered but never presented an offer of a one-time payment of more than $2B to WMB to walk away.
- Faber also says the market is focused on whether ETE will try to access the capital markets to bolster its ability to finance activities, based on remarks from yesterday's Energy Transfer Partners (ETP +2.1%) earnings conference call.
- Also: WPZ +4.3%.
Thu, Feb. 25, 2:55 PM
- Williams Cos. (WMB -5.4%) plummets 10% before trading is halted, then bounces slightly, following a NY Times report that Energy Transfer Equity (ETE +0.7%) is considering pulling out of their planned merger.
- ETE execs are "suffering from a giant case of buyer’s remorse," and are "frantically" searching for a way to pull out of the deal, according to the report, which says ETE considered but never presented an offer of a one-time payment more than $2B to WMB to walk away.
- Shares of both companies have plunged more than 60% and shed a combined $37B in market value in the five months since the takeover was closed, and the value of the deal lost another ~$1B today after ETE announced disappointing Q4 earnings and the stock dropped to its lowest level since 2009.
- Also: ETP -10.1%, WPZ -6.9%.
Williams Partners LP owns, operates, develops and acquires natural gas, natural gas liquids and oil gathering systems and other midstream energy assets. It provides gathering, treating and compression services. The company was founded in January 2010 and is headquartered in Oklahoma City, OK.
Sector: Basic Materials
Industry: Specialty Chemicals
Country: United States