Fund-backed Caiman Energy sells unit for $2.5bn

Caiman Energy, the US midstream energy company that has a strong presence in the Marcellus Shale region, has agreed to sell wholly owned subsidiary Caiman Eastern Midstream – an independent gas gathering and processing business – to Williams Partners, a master limited partnership keen to build large-scale infrastructure in the Marcellus Shale, for $2.5 billion.

With operations in northern West Virginia, southwestern Pennsylvania and eastern Ohio, Caiman Eastern Midstream’s assets include a gathering system, two processing facilities and a fractionator. The company is currently expanding its existing facilities and has an ethane pipeline planned. The assets have long-term contracted commitments, including 236,000 dedicated gathering acres from 10 producers in West Virginia, Ohio and Pennsylvania.

Caiman Eastern Midstream is a wholly owned subsidiary of Caiman Energy, the Dallas-based midstream energy company. Caiman Energy had previously received a $380 million commitment from San Antonio, Texas-based fund manager EnCap Flatrock Midstream before raising a $200 million credit facility led by Bank of America and Wells Fargo and then, in July 2011, receiving up to $300 million from New York-headquartered fund manager Highstar Capital.  

In a statement, Williams Partners – which is 72 percent-owned by The Williams Companies, a New York Stock Exchange-listed natural gas company – said the acquisition would provide it with a “significant footprint and growth potential in the natural gas liquids-rich portion of the Marcellus Shale”. It said it expected the assets to gather more than 2 billion cubic feet per day and produce approximately 300,000 barrels per day of natural gas liquids and condensate by 2020.

Williams Partners, a diversified master limited partnership, is focused on natural gas transportation; gathering, treating and processing; storage; natural gas liquid fractionation; and oil transportation. It currently owns interests in three major interstate natural gas pipelines that, combined, deliver 14 percent of the natural gas consumed in the US.