Williams Partners and Williams Announced an Agreement to Buy Williams' Gulf Olefins Biz

Williams Partners and Williams announced an agreement for Williams Partners to acquire Williams'approximately 83-percent undivided interest in the Geismar olefins production facility,as well as Williams'refinery-grade propylene splitter for$2.264 billion and pipelines in the Gulf region,for$100 million.Additionally,Williams Partners will be responsible for the completion of the ongoing expansion of the Geismar facility projected to cost$270 million and additional pipelines projected to cost approximately$160 million.

Williams also agreed to temporarily waive approximately$16 million per quarter of general partner incentive distribution rights(IDRs)until the later of Dec.31,2013 or 30 days after the Geismar plant expansion is operational.Williams estimates the foregone IDRs will last approximately five quarters,which would total$80 million.

The table below presents a comparison of expected post-expansion segment profit plus DD&A for 2014 to the transaction price for these assets.2014 is expected to be the first full year of operations at the Geismar facility following the expansion,expected to be completed in late 2013.As a result,2014 is more representative of the Geismar facility's long-term earnings and cash flow generation capacity.

The partnership expects the addition of olefins production to its business would bring more certainty to cash flows that today are exposed to the market for ethane,which is projected to experience periods of volatility as feedstock demand for infrastructure lags new supplies from shale-gas production.North American ethylene demand is expected to remain strong,given its continuing advantaged cost compared with ethylene derived from crude-oil based feedstock.

Williams Partners expects that the addition of olefins production to its business via this acquisition will be accretive to distributable cash flow,on a per-unit basis for the partnership's unitholders.Williams Partners plans to fund the acquisition with the issuance to Williams of 42.8 million Williams Partners limited-partner units,$25 million in cash and an increase to the general partner's capital account to maintain Williams'2-percent general-partner interest.The transaction is expected to close in early November.

Williams will gain increased distributions from Williams Partners for the limited-partner units it will receive as consideration for the transaction.The increased distributions from Williams Partners support Williams'dividend growth strategy.