Weakness in the equity markets has forced Williams to revamp a plan that will create two stand-alone publicly traded companies from its exploration and production (E&P) business and natural gas pipeline unit, the Tulsa -based company said Tuesday.
Under a revised plan approved by the board of directors, Williams plans to separate its E&P business, to be known as WPX Energy Inc., via a tax-free spinoff to shareholders by the end of the year. Williams would keep its natural gas pipeline and midstream assets. The previous plan unveiled in February called for the company to launch an initial public offering (IPO) of WPX this year, followed by a spinoff of the remaining WPX shares in early 2012 (see Daily GPI, Feb. 17).
CEO Alan Armstrong had hinted last month that the split was to proceed “when market conditions are suitable” (see Daily GPI, Sept. 12). He restated that sentiment on Tuesday.
“The continued instability and weakness in equity markets, especially for new issuances, makes the IPO of WPX Energy appear unattractive in the near term,” said Armstrong. “However, the strong growth in cash flows from our energy infrastructure businesses gives us the flexibility to revise our plans and prepare to separate WPX Energy by the end of this year. Despite the change, the outcome of the separation remains the same — we’re creating two distinct and well positioned companies, each of which will provide an opportunity for shareholders to realize greater value.”
Williams, he said, plans to focus on meeting demand for “large-scale energy infrastructure in North America” that would yield a “high-dividend, high-growth platform.”
Once the spinoff is completed, shareholders would own common stock in Williams as well as WPX. On Wednesday Williams plans to file its initial Securities and Exchange Commission Form 10 for WPX, which is to provide more detailed information.
WPX’s senior management team, drawn from Williams’ executive staff, is to be led by CEO Ralph A. Hill, CFO Rodney J. Sailor and general counsel James J. Bender. Bryan K. Guderian is to become senior vice president of operations, while Neal A. Buck would be senior vice president of business development and land. Marcia MacLeod takes over as senior vice president of human resources and administration, and Michael R. Fiser will be senior vice president of marketing. Steven G. Natali would serve as senior vice president of exploration while J. Kevin Vann is to become chief accounting officer.
Williams noted that its preparations for the WPX spinoff by the end of the year “do not preclude the company from pursuing the alternative of a WPX Energy IPO followed by a spinoff of its remaining WPX Energy shares, as originally planned, in the event that market conditions become favorable.”
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