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Williams Partners to sell interests in Geismar olefins facility

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Hydrocarbon Engineering,

Williams Partners L.P. has announced that it has agreed to sell 100% of its membership interest in Williams Olefins LLC, which owns an 88.46% undivided ownership interest in the Geismar, Louisiana, olefins plant and associated complex, to NOVA Chemicals for US$2.1 billion in cash subject to customary closing conditions.

Additionally, upon closing of the transaction, Williams Partners subsidiaries will enter into long-term supply and transportation agreements with NOVA Chemicals to provide feedstock to the Geismar olefins plant via Williams Partners’ Bayou Ethane pipeline system in the US Gulf Coast. These agreements secure a meaningful long-term fee-based revenue stream for the partnership.

“The Williams Olefins transaction and these announced new supply and transportation agreements fortify our focus on natural gas market fundamentals, reduce our commodity margin exposure and secure our fee-based Gulf Coast transportation business – all consistent with Williams’ strategy to allocate capital to its core, natural gas-focused business,” said Alan Armstrong, chief executive officer of Williams Partners’ general partner. “When the Williams Olefins transaction closes, we expect to be at 97% fee-based revenues driven largely by natural gas volumes. Today’s announcements further strengthen our financial position to support Williams’ peer-leading, low-risk growth portfolio.”

Williams Partners plans to use the cash proceeds from the Williams Olefins transaction to pay off its US$850 million term loan and to fund a portion of the capital and investment expenditures that are a part of the partnership’s extensive growth portfolio. Williams expects that for federal tax purposes, any taxable gain generated from the transaction will be sheltered by its net operating loss carry-forwards. As a result of today’s Williams Olefins transaction announcement, Williams Partners plans to update its financial guidance at its Analyst Day event on 11 May.

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