Williams Companies Raises Funds for Access Midstream Buyout - Analyst Blog

North American energy firm, Williams Companies Inc. WMB has closed the previously declared public offering of 60,950,000 shares. The company revealed that 7,950,000 shares – of the total amount – were purchased by the underwriters, as they fully exercised the 30-day option for buying additional stocks. The stock was priced at $57.00 per share.

The offering's net proceeds will likely be utilized for funding part of its recently announced $6.0 billion acquisition of the 50% general partner interest and 55.1 million limited partner units in Access Midstream Partners LP ACMP. (Read our blog: Williams Companies to Spend $6B on Access Midstream Buyout)

Tulsa, OK-based Williams Companies is a premier energy infrastructure provider in North America. The company's core operations include finding, producing, gathering, processing and transportation of natural gas.

Boasting a widespread pipeline system, Williams Companies is one of the largest domestic transporters of natural gas by volume. Its facilities – gas wells, pipelines and midstream services – are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard.  

However, we remain concerned about Williams Companies' high debt levels, which make it vulnerable to an extensive drop in commodity prices. As of Mar 31, 2014, Williams Companies had long-term debt of $12.1 billion, representing a debt-to-capitalization ratio of 72.4%.

As a result, Williams Companies carries a Zacks Rank #3 (Hold), which implies that it is expected to perform in line with the broader U.S. market in the next one to three months.

Meanwhile, one can look at better-ranked players in the same industry like Holly Energy Partners LP HEP and Pembina Pipeline Corporation PBA. Both stocks sport a Zacks Rank #1 (Strong Buy).

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