Williams Announces Global Resolution with Chesapeake
Negotiated resolution reaffirms the value of Williams’ midstream infrastructure and incentivizes future development of critical acreage
“Williams has strategically invested in large-scale and essential infrastructure necessary to gather and treat the natural gas that Chesapeake and its joint interest owners produce in the Eagle Ford, Haynesville, and Marcellus,” said
Key highlights of the global resolution, currently pending bankruptcy court approval, include the following:
- Chesapeake will pay all pre-petition and past due receivables related to midstream expenses, per the existing contracts.
- Chesapeake will not attempt to reject Williams’ gathering agreements in the Eagle Ford, Marcellus, or Mid-Con.
In the Haynesville, Williams has agreed to reduce its gathering fees in exchange for gaining ownership of a portion of Chesapeake’s South Mansfield producing assets, which consist of approximately 50,000 net mineral acres. In addition, Chesapeake will enter into a long-term gas supply commitment of a minimum 100 Mdth/d and up to 150 Mdth/d for the Transco Regional Energy Access (REA) pipeline currently under development.
- The reduced gathering fees are consistent with incentive rates that Williams has offered in the past to attract drilling capital and are therefore expected to promote additional drilling across Chesapeake’s prolific Haynesville footprint.
- The South Mansfield assets provide an opportunity for Williams to transition the acreage to a strong and well-capitalized operator that will grow production volumes, and drive growth in fee based cash flows on Williams’ existing spare midstream capacity, while also enabling Williams to market significant gas volumes for future downstream opportunities.
The commitment to REA provides valuable incremental takeaway capacity for Chesapeake’s Marcellus production and the associated Williams gathering systems, while adding a valuable capacity commitment to the
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