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Tulsa, OK-based midstreamer Williams said Thursday it has reached a deal to acquire MountainWest Pipelines Holding Co. from Southwest Gas Holdings Inc. in a $1.5 billion cash-and-debt transaction.
MountainWest comprises about 2,000 miles of FERC-regulated interstate natural gas pipeline systems located mainly in Utah, Wyoming and Colorado, with roughly 8 Bcf/d of total transmission capacity.
The MountainWest assets also hold 56 Bcf of natural gas storage capacity, including the Clay Basin underground reservoir, “providing valuable service to western markets,” according to Williams
[U.S. LNG Export Projects: To be or not to be — FIDs or Fast LNG is the question that NGI’s Director of Strategy & Research Patrick Rau asks after listening to third quarter earnings calls. Tune into NGI’s Hub & Flow podcast to learn more.]
“Our natural gas focused strategy is anchored in having the right assets in the right places to serve our nation’s growing demand for clean, affordable and abundant natural gas,” said CEO Alan Armstrong. “MountainWest is complementary to our current footprint, providing us with infrastructure for natural gas deliveries across key demand markets, including into Salt Lake City…”
He added, “We also see this acquisition as an opportunity to bring value to both Williams and MountainWest customers as we integrate business processes and systems, allowing us to potentially offer new flow paths for next generation natural gas that could create additional market optionality for our shippers.”
The acquisition, slated to close in 2023, offers “highly contracted revenues anchored by long-term demand-pull customers with an opportunity to provide incremental service offerings such as next generation natural gas through the expanded footprint,” Williams said. 
The transaction would see Williams shell out $1.07 billion of cash and $430 million of assumed debt to Las Vegas-based Southwest Gas.
Williams management highlighted that the acquisition would give it access to new demand markets, and offer connectivity to its growing Wamsutter system in the Green River Basin.
The firm said the assets support natural gas needs “in increasingly unpredictable markets due to renewables growth…”
Southwest Gas also is spinning off its wholly owned subsidiary Centuri Group Inc. to form a new independent publicly traded utility infrastructure services company, a move for which activist investor Carl Icahn had been pushing.
The MountainWest and Centuri transactions follow a May settlement between Southwest Gas and Icahn, who had long been critical of management.
The settlement gave Icahn the right to appoint at least three directors to the Southwest Gas board, and a fourth if the Centuri spinoff did not occur.
Southwest Gas said Thursday that the transactions are part of a larger overhaul to simplify the firm’s corporate structure and maximize shareholder value.
“After carefully evaluating all available alternatives, we are confident that simplifying our corporate structure and creating two focused industry leaders is the right outcome of our strategic review,” said Southwest’s Renae Conley, board chair. “Southwest Gas will be a leading fully regulated natural gas utility with an optimized balance sheet that will enable continued investment in safety, customer service and infrastructure and a stable and competitive dividend policy.”
She added, “Centuri will benefit from a management team focused on its comprehensive service capabilities, blue-chip customer base and increasing national investments in utility infrastructure, 5G and renewables. The strategic actions we are taking create the opportunity for stockholders to own two leading independent companies poised for long-term sustainable value creation.”
Southwest Gas CEO Karen Haller said the MountainWest and Centuri transactions “will allow the Company to exclusively focus on our obligations to the communities we serve while continuing to exceed customer expectations and build on the significant growth potential we have already started to realize. 
“We have an exciting opportunity to optimize Southwest Gas in order to deliver an expected return on equity of more than 8% while continuing to invest in our utility operations and maintaining industry-leading customer satisfaction.”
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Related topics: natural gas pipelines natural gas storage Rockies
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