Williams Partners L.P. (WPZ) has agreed to sell stakes in its first oil and gas platform project in the Gulf of Mexico (GoM) to Japan’s largest grain-trading company Marubeni Corp.
The agreement calls for Marubeni to acquire a 49% interest in Williams Partners’ first Gulfstar floating production system (FPS) project. Upon closure – expected in the second quarter of 2013 – Marubeni will fund $225 million in capital expenditure and follow with monthly capex representing the interest in a floating-equipment business. This first FPS will assist companies like Chevron Corp. (CVX) and Hess Corp. (HES) in the deepwater GoM region at the Tubular Bells field, with managing production, export pipeline, oil and gas gathering, and gas processing services.
The facility has been under construction since late 2011 and is slated to be operational by June 2014. The Gulfstar spar platform will be fixed in Block 768 at 4,300 feet depth under the GoM's Mississippi Canyon area. This unit is designed to process 60,000 barrels of oil per day and 200 million standard cubic feet of gas per day and assist seawater injection services. This design will let customers minimize their cycle time from discovery to first oil. Moreover, the platform retains its stability even in rough weather conditions.
The GoM is a hurricane-prone region and hence equipment failure and production disruptions frequently impact crude oil prices. This makes the spar-based production system a widespread alternative for operations in this region.
Williams Partners transports 14% of the U.S. gas consumption. The partnership − the general partner of the partnership is owned and managed by Williams Companies Inc. (WMB) − is engaged in a wide range of operations, starting from production and transportation of oil and gas to refining of petrochemical products. It expects to spend approximately $500 million on Gulfstar.
Williams Partners and Marubeni also plan to form a partnership in petrochemical projects. Although the groups did not disclose financial details of the transaction, this project is expected to help in shale gas extraction in North America.
Williams Partners currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.