Williams Partners has drafted a contract with Saddle Operating, a private equity-backed company that is taking over Chesapeake Energy’s Barnett shale holdings, as an aim to revitalize natural gas exploration to the play and make wells profitable once again.
The key to this pact is tying the monthly fees Williams charges for gathering and delivering fuel to the price of gas traded on the New York Mercantile Exchange.
“As a midstream service provider, we best serve our shareholders and our upstream partners by supporting the economics of key production areas," said Alan Armstrong, chief executive officer of Williams Partners’ general partner. "These conditional agreements will help re-position the Barnett as a competitive basin for our new Barnett producer customer as current drilling and completion technologies are implemented.”
Williams is rewriting contracts as Chesapeake Energy sells its Barnett holdings to Saddle. As part of its new Barnett agreements, Williams reported it will receive $754 million that it will use toward its company debt. It will also receive $66 million from its revised contract with Chesapeake.