Canada Pension Plan Investment Board (CPPIB) has broadened its exposure to the North American natural gas market with a $1.34bn (€1.18bn) investment for a 35% stake in a newly created joint venture with Williams.
Williams said it has bought the remaining 38% stake in Utica East Ohio Midstream system (UEO) UEO from Momentum Midstream and has formed the $3.8bn joint venture with CPPIB that will include Williams’ Ohio Valley Midstream system (OVM) and UEO.
Williams will retain 65% ownership and will operate the combined business.
Williams said the $1.34bn from CPPIB will be used to offset the purchase price of the UEO acquisition, with the balance of proceeds used to fund Williams’ portfolio and for debt reduction.
Alan Armstrong, president and chief executive officer of Williams, said: “Acquiring the remaining interest in UEO and forming a partnership with CPPIB continues to advance our already strong position in the Northeast.
“These transactions create a platform for continued optimisation and growth, provide deleveraging, reduce capital spending on processing and fractionation capacity for OVM, and unlock further synergies through combined operatorship of the systems.”
Avik Dey, managing director, head of energy and resources at CPPIB, said: “This joint venture will provide CPPIB additional exposure to the attractive North American natural gas market, aligning with our growing focus on energy transition.”
Dey said the joint venture complements CPPIB’s recent investment in Encino Acquisition Partners, an anchor customer on UEO and other Williams gathering assets.
”Through these unique operations in highly attractive basins, we will further our strategy to establish US midstream exposure alongside highly regarded and experienced operating partners such as Williams. We look forward to expanding this new joint venture over time,” Dey said.
Micheal Dunn, chief operating officer of Williams, said: “We’ve seen first-hand the focus of the UEO employees on delivering safe, environmentally compliant and reliable results, and we are excited to welcome these employees to Williams.
“Williams looks forward to helping Encino and CPPIB maximise their important investment in the basin through safe, reliable and cost-efficient services.”