Six months ago, Energy Transfer Equity LP said buying Williams Cos. could boost its earnings by $2 billion a year. On Wednesday, the pipeline operator lowered its estimate to something it described as “materially less” — $170 million.
In tempering expectations by 92 percent, the two midstream giants said in a filing that they were “taking into account facts and circumstances occurring since” they first agreed to the takeover on Sept. 28. Oil prices have plunged by $5 a barrel and natural gas is down 30 percent since that day.
The revision is yet another bump in what’s proven to be a rocky road to closing the deal between the two companies.
Energy Transfer offered $43.50 apiece for Williams shares in September. The market value of both companies has fallen dramatically since then, crushed by the weight of crude’s collapse and casting doubt on whether the takeover will actually happen.
The companies’ new estimates for benefits by 2020, realized from “synergies” related to more efficient operations and performance, are based on U.S. benchmark West Texas Intermediate oil prices ranging from $32.92 per barrel this year to $44.31 in 2020 and Henry Hub natural gas prices ranging from $2.34 per billion cubic feet this year to $3.11 in 2020.
Energy Transfer spokeswoman Vicki Granado declined to comment beyond the filing. Williams said by email that it’s still committed to completing the deal agreed to in September.
The company “believes the transaction with ETE is in the best interests of stockholders and intends to consummate the transaction following receipt of stockholder approval,” Williams said.
A mere five months after Energy Transfer closed the acquisition, the deal has become a nightmare.
Shares of both companies have plummeted more than 60 percent and shed a combined $37 billion in market value, partly in response to the huge decline in energy prices, but also because of the numerous concerns investors have about the complicated merger.
This report includes material from the Star-Telegram archives