2010-11-30-2010-11-19

To buy 75 miles of gathering pipelines and two compressor stations in Susquehanna County, PA.

Williams Field Services Co. LLC, a subsidiary of Williams Partners LP, Tulsa, Okla., (NYSE: WPZ) plans to acquire midstream assets in Susquehanna County, Pennsylvania, from Cabot Oil & Gas Corp., Houston, (NYSE: COG) for $150 million.

The assets include approximately 75 miles of gathering pipelines and two compressor stations. The new system will connect with Williams Partners Springville gathering pipeline in Susquehanna County, significantly expanding the system and adding additional delivery points.

The deal also establishes a 25-year firm gathering arrangement between Cabot and Williams Field Services in the northeastern Pennsylvania area of the Marcellus covering a 138,000-gross-acre area of mutual interest.

Williams Field Service will, in the next two years, complete construction of a 32-mile, 24-inch high pressure pipeline to Transco from Cabot's Lathrop station, build 65 miles of various 16-inch to 24-inch trunk lines in Susquehanna County and construct two additional compressor stations with a total of 40,000 horsepower.

The arrangement will also connect all Cabot drilling program wells with 8-inch and 10-inch gathering lines and deliver Cabot production to five interstate pipeline delivery points.

The new Williams Marcellus gathering system will create takeaway capacity for Cabot of approximately 1.2 billion cubic feet of gas per day off the existing leasehold during the next two to three years with its planned expansions and will invest in excess of $150 million in 2011.

Cabot chairman, president and chief executive Dan O. Dinges says, "This agreement will displace roughly $75 million annually in planned infrastructure expenditures by Cabot during 2012-2015 along with eliminating the need for infrastructure investment in 2011. This planned level of investment by Cabot would not have provided us the takeaway capacity proposed under the Williams agreement."

Cabot has also increased its firm takeaway capacity to the Williams Partners' Transco Pipeline just south of Susquehanna County. The new level is 350 million cubic feet per day, up from 150 million per day in February 2010.

Williams Partners senior vice president, midstream business, Alan Armstrong says, "This additional expansion in the Marcellus shale is an ideal growth opportunity for Williams Partners. We have the opportunity to serve another one of the biggest producers in the Marcellus with the type of large-scale solutions required for Cabot's rapidly expanding production."

Williams Partners will fund the purchase with cash, its credit facility and capital market transactions.

The deal is expected to close during the fourth quarter.