Sign Up for FREE Daily Energy News
  • Stay Connected
  • linkedin
  • twitter
  • facebook
  • youtube2

Hazloc Heaters
Hazloc Heaters

KKR, Williams to Pay $1.2 Billion for Shale Pipe Operator

English Español 简体中文 हिन्दी Português
These translations are done via Google Translate

July 30, 2018, by Naureen S. Malik


KKR & Co. and Williams Cos. agreed to buy a Colorado pipeline and services provider from TPG Growth for $1.2 billion through a joint venture.

The new partners’ acquisition of Discovery Midstream will be funded primarily through KKR’s energy and infrastructure funds, according to a statement Monday. Williams also said it was selling assets and equity from Williams Partners LP’s Four Corners Area business to Harvest Midstream Co.

Discovery works in the Denver-Julesberg shale play, with oil and natural gas pipelines, gas processing, liquids handling and oil storage. Historically, investing in midstream assets hasn’t been attractive, with yields in the single digits to low teens, said Katie Bays, a Height Securities LLC analyst. Private-equity interest in pipelines has risen, though, in light of federal tax changes that helped boost yields into the low- to mid-teens, she said.

Recently, “we have a number of private equity clients who have become more interested in the pipeline space,” Bays said in a telephone interview.

Pipeline operators have been having a tough time raising capital to continue to grow and increase investor distributions, she said. The companies can attract private equity investment that’s “cheaper than if you were to go to a public market.”

Shares of Williams rose as much as 1.6 percent after the deal announcements, as did Williams Partners.

Williams will have an initial ownership stake of 40 percent of the Discovery purchase price, but will climb to 50 percent as the company has “committed to fund additional capital,” according to the statement. Williams will also operate Discovery and hold a majority of governance voting rights.

The deal with Discovery is expected to close in the third quarter.

Jefferies Financial Group Inc. acted as TPG’s financial adviser while Simmons & Co. served in that role for KKR and Williams.

Share This:

More News Articles

New SHOWCASE Directory Companies


RAM Industries Inc.
RHK Hydraulic Cylinder Services Inc.