As Williams Partners enters the northern Colorado distribution system, it is also bailing out of the Four Corners Area, selling its assets for $1.125 billion to Harvest Midstream Company of Houston.
The system encompasses more than 3,700 miles of pipeline, two gas processing plants, and one CO2 treating facility in the counties of San Juan and Rio Arriba, New Mexico and La Plata, Colorado. It has an inlet gathering capacity of 1.8 billion cubic feet of gas per day.
The agreement is expected to be closed in the second half of 2018. The assets, located in northwestern New Mexico and southern Colorado had $85 million in earnings before interest, taxes, depreciation and amortization in 2017 and they were expected to be $82 million this year.
Why the sale by Williams?
Alan Armstrong, president and chief executive officer of Williams explained, “The Four Corners Area has been an important part of Williams dating back to the acquisition of Northwest Energy in 1983. However, pressure on natural gas pricing from adjacent basins like the Permian, demand a new basin model that consolidates and integrates upstream production with midstream operations in a way that optimizes throughput and lowers cost.”
He said it will allow the company to redeploy the proceeds into improved opportunities for growth.
“The FCA transaction is a win-win opportunity for both Williams and Harvest,” said Micheal Dunn, chief operating officer of Williams. The sale of the FCA assets supports Williams’ expansion of operations into the DJ Basin and funding of future growth capital.”
