Market Overview

Williams Announces Strategic Transactions Resulting in Entry into Colorado's Denver-Julesburg Basin and Exit from Four Corners Area


Williams (NYSE:WMB) today announced two midstream transactions that
will result in its entry into Colorado's Denver-Julesburg ("DJ") Basin
and the exit of Williams Partners L.P. (NYSE:WPZ) from the Four Corners
Area in New Mexico and Colorado.

Williams and KKR & Co. (NYSE:KKR) ("KKR") today announced that they
have entered into an agreement to purchase Discovery DJ Services
("Discovery") from TPG Growth, the middle market and growth equity
platform of alternative asset firm TPG, for $1.173 billion, subject to
customary closing conditions and purchase price adjustments. Discovery
is a Dallas-based provider of natural gas and oil gathering and natural
gas processing services in the southern portion of Colorado's DJ Basin.

When the acquisition closes, which is expected to occur in early August,
Williams and KKR will own the entirety of the Discovery midstream
business through a joint venture. Williams' initial economic
contribution and ownership will be 40 percent of the purchase price
while KKR's initial economic contribution and ownership will be 60
percent. Under the terms of the agreed-to joint venture, Williams will
be the operator of Discovery and will hold a majority of governance
voting rights. Williams has committed to fund additional capital as
required to bring its economic ownership to 50/50. Additionally,
Williams at its option, may acquire a portion of KKR interests at
predetermined, agreed-to terms until the sixth anniversary of close.
Williams will use the equity method of accounting for this acquisition.
Williams expects the Discovery transaction to represent a 5-6 times
multiple to Williams' investment inclusive of additional investments of
approximately $250 million between 2018 and 2020 and based on expected
2020 EBITDA forecast; with opportunities for additional improvement
based upon the success of natural gas liquids (NGL) opportunities.

Discovery, whose management team is partnering with Williams and KKR to
continue executing for the customers of the DJ Basin, provides midstream
services to producers drilling the prolific Niobrara and Codell
stacked-pay zones of the basin. Discovery's infrastructure and related
facilities are strategically located in Weld and Adams counties in
Colorado. The Discovery system includes both natural gas and crude oil
gathering pipelines, cryogenic gas processing, liquids handling and
crude oil storage. The Discovery assets include 60 million cubic feet
per day (MMcf/d) of gas processing capacity with an additional 200
MMcf/d plant that is fully permitted and under construction and is
expected to be in service by the end of 2018. The Discovery assets also
include 130 miles of natural gas pipeline and approximately 260,000
acres dedicated for gas gathering and processing plus an additional
60,000 acres for oil gathering.

"Adding the fast-growing Discovery midstream business, including sites
with permitting underway for greater than 1 Bcf/d of gas processing to
our portfolio, follows our strategy of connecting the best supplies to
the best markets. This is a great opportunity to expand our asset
footprint into a premium-growth basin and brings the benefits of the
Williams capability suite to better serve producers in the DJ Basin. The
acquisition of Discovery is expected to unlock valuable synergies with
our current operations and drive increased earnings," said Alan
Armstrong, president and chief executive officer of Williams. "For
example, this transaction allows Williams to take advantage of synergies
between the Discovery assets and our downstream businesses via the DJ
Lateral of Overland Pass Pipeline ("OPPL"). We will now have the
opportunity to integrate output from these acquired assets with
production from our existing processing footprint in the West segment
into our advantaged downstream assets, including OPPL and the Conway
fractionator and storage facilities."

Concurrent with the announcement of the Discovery transaction, Williams
is also announcing the combined sale of assets and equity comprising
WPZ's Four Corners Area ("FCA") business in New Mexico and Colorado to
Harvest Midstream Company ("Harvest") for $1.125 billion in cash,
subject to customary closing conditions. The cash proceeds from the FCA
transaction will contribute to funding Williams' extensive portfolio of
attractive growth capital and investment expenditures, including those
opportunities associated with the Discovery acquisition. The FCA assets
being divested of by Williams are located in San Juan and Rio Arriba
Counties in New Mexico and in La Plata County in Colorado and include
3,700 miles of pipeline, two gas processing plants, and one CO2 treating
facility. In 2017, the Modified EBITDA contribution from the FCA assets
was approximately $85 million and is forecast to be $82 million
annualized in 2018. This transaction is expected to close in the second
half of 2018, following the closing of the previously-announced merger
of WPZ into WMB.

"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. At the same time, we
are pleased that an outstanding midstream services provider like Harvest
will be the operator of these assets and know that the employees who
move from Williams to Harvest will continue delivering gas gathering and
processing expertise that is second to none in that basin."

Armstrong added, "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. We believe that Harvest is ideally
positioned to achieve this integration, and Williams can redeploy the
proceeds into improved opportunities for growth. The value and multiple
on EBITDA that we are receiving is a testament to the high-quality
assets that Williams employees have grown and maintained in the basin
over the past 35 years."

For the Discovery acquisition, Simmons acted as the lead financial
adviser to both Williams and KKR; Gibson Dunn served as legal counsel to
Williams, and Simpson Thatcher served as legal adviser to KKR. For the
transaction to divest of its assets in the Four Corners Area, Williams'
lead financial adviser was Morgan Stanley and Davis Polk acted as legal

Investor Webcast and Conference Call Aug. 2 to Discuss Second-Quarter
2018 Financial Results and Today's Transactions

The transactions announced today are expected to impact Williams'
guidance provided on May 17, 2018, for capital expenditures. Williams
expects to provide an update to 2018 and 2019 capital expenditures
guidance, including updates from today's transactions and other
commercial activities on the company's second-quarter 2018 earnings
webcast and conference call scheduled for Aug. 2, 2018, at 9:30 a.m.
Eastern Time (8:30 a.m. Central Time). A limited number of phone lines
will be available at (877) 260-1479. International callers should dial
(334) 323-0522. The conference ID is 1766230. Williams senior management
will also discuss today's transactions during the Aug. 2 webcast and

About Williams & Williams Partners

Williams (NYSE:WMB) is a premier provider of large-scale infrastructure
connecting U.S. natural gas and natural gas products to growing demand
for cleaner fuel and feedstocks. Headquartered in Tulsa, Okla., Williams
owns approximately 74 percent of Williams Partners L.P. (NYSE:WPZ).
Williams Partners is an industry-leading, large-cap master limited
partnership with operations across the natural gas value chain including
gathering, processing and interstate transportation of natural gas and
natural gas liquids. With major positions in top U.S. supply basins,
Williams Partners owns and operates more than 33,000 miles of pipelines
system wide – including the nation's largest volume and fastest growing
pipeline – providing natural gas for clean-power generation, heating and
industrial use. Williams Partners' operations touch approximately 30
percent of U.S. natural gas.

About KKR

KKR is a leading global investment firm that manages multiple
alternative asset classes, including private equity, energy,
infrastructure, real estate, credit and, through its strategic partners,
hedge funds. KKR aims to generate attractive investment returns by
following a patient and disciplined investment approach, employing
world-class people, and driving growth and value creation with KKR
portfolio companies. KKR invests its own capital alongside its partners'
capital and provides financing solutions and investment opportunities
through its capital markets business. References to KKR's investments
may include the activities of its sponsored funds. For additional
information about KKR & Co. Inc. (NYSE:KKR), please visit KKR's website
at and
on Twitter @KKR Co.

About TPG Growth

TPG Growth is the middle market and growth equity investment platform of
TPG, the global alternative asset firm. With approximately $13.2 billion
of assets under management, TPG Growth targets investments in a broad
range of industries and geographies. TPG Growth has the deep sector
knowledge, operational resources, and global experience to drive value
creation, and help companies reach their full potential. The firm is
backed by the resources of TPG, which has approximately $84 billion of
assets under management. For more information, visit

About Harvest Midstream Company

Harvest Midstream Company, formerly Harvest Pipeline Company, is a
privately held midstream services provider based in Houston, Texas, that
operates crude oil and natural gas gathering, storage, transportation,
treatment and terminalling assets across the Lower 48 and Alaska. To
learn more visit

Forward-Looking Statements

The reports, filings, and other public announcements of The Williams
Companies, Inc. (Williams) may contain or incorporate by reference
statements that do not directly or exclusively relate to historical
facts. Such statements are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended
(Securities Act), and Section 21E of the Securities Exchange Act of
1934, as amended (Exchange Act). These forward-looking statements relate
to anticipated financial performance, management's plans and objectives
for future operations, business prospects, outcome of regulatory
proceedings, market conditions, and other matters. We make these
forward-looking statements in reliance on the safe harbor protections
provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical facts, included
herein that address activities, events or developments that we expect,
believe or anticipate will exist or may occur in the future, are
forward-looking statements. Forward-looking statements can be identified
by various forms of words such as "anticipates," "believes," "seeks,"
"could," "may," "should," "continues," "estimates," "expects,"
"forecasts," "intends," "might," "goals," "objectives," "targets,"
"planned," "potential," "projects," "scheduled," "will," "assumes,"
"guidance," "outlook," "in-service date" or other similar expressions.
These forward-looking statements are based on management's beliefs and
assumptions and on information currently available to management.

Forward-looking statements are based on numerous assumptions,
uncertainties and risks that could cause future events or results to be
materially different from those stated or implied herein. Many of the
factors that will determine these results are beyond our ability to
control or predict. Specific factors that could cause actual results to
differ from results contemplated by the forward-looking statements
include, among others, the following:

  • Satisfaction of the conditions to the completion of the WPZ Merger,
    including receipt of the Williams stockholder approval, and our
    ability to close the WPZ Merger;
  • Whether WPZ will produce sufficient cash flows to provide expected
    levels of cash distributions;
  • Whether we are able to pay current and expected levels of dividends;
  • Whether we will be able to effectively execute our financing plan;
  • Availability of supplies, market demand, and volatility of prices;
  • Inflation, interest rates, and general economic conditions (including
    future disruptions and volatility in the global credit markets and the
    impact of these events on customers and suppliers);
  • The strength and financial resources of our competitors and the
    effects of competition;
  • Whether we are able to successfully identify, evaluate and timely
    execute our capital projects and other investment opportunities;
  • Our ability to acquire new businesses and assets and successfully
    integrate those operations and assets into existing businesses as well
    as successfully expand our facilities;
  • Development and rate of adoption of alternative energy sources;
  • The impact of operational and developmental hazards and unforeseen
  • The impact of existing and future laws (including, but not limited to,
    the Tax Cuts and Jobs Act of 2017), regulations, the regulatory
    environment, environmental liabilities, and litigation, as well as our
    ability to obtain necessary permits and approvals, and achieve
    favorable rate proceeding outcomes;
  • Our costs and funding obligations for defined benefit pension plans
    and other postretirement benefit plans;
  • Changes in maintenance and construction costs;
  • Changes in the current geopolitical situation;
  • Our exposure to the credit risk of our customers and counterparties;
  • Risks related to financing, including restrictions stemming from debt
    agreements, future changes in credit ratings as determined by
    nationally-recognized credit rating agencies and the availability and
    cost of capital;
  • The amount of cash distributions from and capital requirements of our
    investments and joint ventures in which we participate;
  • Risks associated with weather and natural phenomena, including climate
    conditions and physical damage to our facilities;
  • Acts of terrorism, including cybersecurity threats, and related
  • Additional risks described in our filings with the Securities and
    Exchange Commission (SEC).

Given the uncertainties and risk factors that could cause our actual
results to differ materially from those contained in any forward-looking
statement, we caution investors not to unduly rely on our
forward-looking statements. We disclaim any obligations to and do not
intend to update the above list or announce publicly the result of any
revisions to any of the forward-looking statements to reflect future
events or developments.

In addition to causing our actual results to differ, the factors listed
above may cause our intentions to change from those statements of
intention set forth herein. Such changes in our intentions may also
cause our results to differ. We may change our intentions, at any time
and without notice, based upon changes in such factors, our assumptions,
or otherwise.

Because forward-looking statements involve risks and uncertainties, we
caution that there are important factors, in addition to those listed
above, that may cause actual results to differ materially from those
contained in the forward-looking statements. For a detailed discussion
of those factors, see Part I, Item 1A. Risk Factors in our Annual Report
on Form 10-K filed with the SEC on February 22, 2018 and in Part II,
Item 1A. Risk Factors in our Quarterly Reports on Form 10-Q.

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