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Williams Buys MountainWest Pipeline System for $1.5 Billion

On December 15, Pipeline giant Williams made a deal to purchase MountainWest Pipelines Holding Co. from Southwest Gas Holdings Inc. for almost $1.5 billion including debt.

Williams is paying $1.07 billion in cash and assuming $0.43 billion of debt to buy MountainWest, which comprises approximately 2,000 miles of interstate natural gas pipeline systems mainly situated across Utah, Wyoming, and Colorado.

The sale comes almost a year after Southwest Gas acquired Dominion Energy’s Quester Pipeline LLC and related entities, which was renamed as MountainWest. Southwest Gas paid almost $2 billion for Questar, plus the assumption of $430 million in debt, and closed the transaction on December 31, 2021.

According to a press release announcing the transaction, the Rocky Mountain system’s total transmission capacity is approximately 8 Bcf/d. MountainWest holds 56 Bcf of total storage capacity, including the Clay Basin underground storage reservoir, maintaining valuable service to western markets. The acquisition price represents an about 8x estimated 2023 EBITDA multiple.

The addition of MountainWest is extending services to major Rockies demand markets by providing natural gas transfer into Salt Lake City and other areas not currently served by Williams. The bolt-on would be incrementally accretive, meaningfully expanding EBITDA without materially affecting the company’s leverage.

The company sees this acquisition as an opportunity to bring value to both Williams and MountainWest customers as they integrate business processes and systems, allowing it to potentially offer new flow paths for next-generation natural gas that could create additional market optionality for its shippers.

The transaction is expected to close in 2023, following the satisfaction of customary closing conditions, including regulatory approvals and the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Williams owns and operates more than 30,000 miles of pipelines system wide – including Transco, the nation’s largest volume and fastest growing pipeline – and handles approximately 30% of the U.S. natural gas supply used for power generation, heating, and industrial use.

MountainWest Pipeline (Dominion Energy Questar Pipeline, LLC) is a subsidiary of Dominion Energy Midstream Partners, LP an interstate natural gas pipeline company that provides transportation and underground storage services in Utah, Wyoming, and Colorado. DEQP owns and operates slightly more than 2,500 miles (4,000 km) of pipeline with a total daily capacity of 2,530 million decatherms. The company's system is in the Rocky Mountains, near large reserves of natural gas in six major producing areas, including the Greater Green River, Uinta, and Piceance basins.

TD Securities and J.P. Morgan served as co-financial advisers to Williams. Moelis & Company and Lazard Freres & Co. LLC served as co-financial advisers to Southwest Gas Holdings. Williams was represented by Davis Polk & Wardwell LLP. Southwest Gas Holdings was represented by Morrison & Foerster LLP.

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