Williams’ board of directors has approved spinning off the exploration and production (E&P) business as WPX Energy Inc. through a tax-free dividend at the end of this month.

A plan by Williams to separate the E&P unit from the midstream operations has been in the works in some form since February (see Daily GPI, Oct. 19; Feb. 17).

“We’re creating two independent and well positioned companies, each of which is positioned to grow and provide an opportunity for shareholders to realize greater value,” said CEO Alan Armstrong. “Williams is well on its way to becoming a premier high-growth, high-dividend equity. And WPX has large-scale positions in attractive basins such as the Marcellus, Bakken and Piceance.”

By spinning off the exploration business, Williams would be “focused on meeting customer demand for large-scale infrastructure that’s designed to maximize the opportunities created by the vastly greater supply of natural gas and natural gas products now known to exist in North America’s unconventional resource plays.” The midstream company’s growth would be across the board through supply and demand projects in several of the biggest North American areas, from the Marcellus Shale, the deepwater Gulf of Mexico and the western United States, as well as in chemicals operations in Canada and from gas transport along the Eastern Seaboard. Williams has close to $5 billion of growth investments planned through 2013.

WPX would keep its focus on exploiting its gas-weighted reserves and related natural gas liquids in the Piceance Basin of the Rocky Mountain region, as well as developing and growing its positions in the Bakken Shale in North Dakota and the Marcellus Shale in Pennsylvania. The company also would have domestic operations in the Powder River Basin in Wyoming and the San Juan Basin in the southwestern United States, along with international investments in Argentina and Colombia. WPX, which like Williams would be headquartered in Tulsa, would have about 1,200 employees.

No action or payment is required by Williams stockholders to receive shares of WPX common stock. Fractional shares of WPX common stock would be aggregated and sold in the open market, with net proceeds distributed pro rata in the form of cash payments to each Williams stockholder. Williams common shares are to continue trading on the New York Stock Exchange (NYSE) through Dec. 31 distribution date. WPX common stock is expected to begin trading on a “when-issued” (WI) basis on the NYSE under the ticker “WPX WI” by Dec. 12. On Jan. 3 the E&P business is expected to begin trading under “WPX.”

Completion of the spinoff still requires satisfying several conditions, including the Securities and Exchange Form-10 registration statement, as well as WPX’s common stock being accepted for listing on the NYSE.

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