Williams announces restructuring, natural gas utilities soar

Williams Companies is a corporation and Williams Partner is a Master Limited Partnership (MLP). MLPs are usually natural resources companies that are publically traded and enjoy some of the tax benefits of limited partnerships.

In trading today, Williams Companies jumped 7.72 percent and Williams Partners rose 16.17 percent. Using the increase today in market capitalization as a measure, the market valued the move at $1.23 billion, with Williams Company gaining $962.16 million and Williams Partners gaining $262.82 million.

Part of that increase, however, may be due to the gains in the broader stock market today and the existing prices of both companies may reflect buying from traders who anticipated the announcement.

In the restructuring, Williams Companies will transfer natural gas pipelines and processing trains to Williams Partners in exchange for approximately $3.5 billion cash and 203 million limited-partner units.

The move is intended to “drive additional growth and value for” both companies, the firms said in a released statement.

Among the befits outlined are that Williams Companies will be able to better pursue acquisitions and growth projects such as exploration and diversification. Williams Partners is expected to benefit from economies of scale and greater distribution, allowing it to compete with larger MLPs. Allocating the pipeline cash flow to Williams Partner may also have tax advantages.

El Paso Corporation (NYSE:EP), a similar company in the natural gas business, jumped 6.56 percent on speculation that it may also undergo a favorable restructuring. Other natural gas companies that gained include Copano Energy, L.L.C. (NASDAQ:CPNO) and Kinder Morgan Energy Partners LP (NYSE:KMP), and DCP Midstream Partners LP (NYSE:DPM).

Natural gas utilities outperformed the market today, gaining 1.49 percent to the S&P 500’s 0.34 percent. Williams announces restructuring, natural gas utilities soar

Williams Companies is a corporation and Williams Partner is a Master Limited Partnership (MLP). MLPs are usually natural resources companies that are publically traded and enjoy some of the tax benefits of limited partnerships.

In trading today, Williams Companies jumped 7.72 percent and Williams Partners rose 16.17 percent. Using the increase today in market capitalization as a measure, the market valued the move at $1.23 billion, with Williams Company gaining $962.16 million and Williams Partners gaining $262.82 million.

Part of that increase, however, may be due to the gains in the broader stock market today and the existing prices of both companies may reflect buying from traders who anticipated the announcement.

In the restructuring, Williams Companies will transfer natural gas pipelines and processing trains to Williams Partners in exchange for approximately $3.5 billion cash and 203 million limited-partner units.

The move is intended to “drive additional growth and value for” both companies, the firms said in a released statement.

Among the befits outlined are that Williams Companies will be able to better pursue acquisitions and growth projects such as exploration and diversification. Williams Partners is expected to benefit from economies of scale and greater distribution, allowing it to compete with larger MLPs. Allocating the pipeline cash flow to Williams Partner may also have tax advantages.

El Paso Corporation (NYSE:EP), a similar company in the natural gas business, jumped 6.56 percent on speculation that it may also undergo a favorable restructuring. Other natural gas companies that gained include Copano Energy, L.L.C. (NASDAQ:CPNO) and Kinder Morgan Energy Partners LP (NYSE:KMP), and DCP Midstream Partners LP (NYSE:DPM).

Natural gas utilities outperformed the market today, gaining 1.49 percent to the S&P 500’s 0.34 percent.