Waste of Energy

24 Mar 2016 By Jeffrey Goldfarb Follow @jgfarb

The buyer is slashing expected merger synergy benefits by 90 pct and warning of big reductions at its target’s Oklahoma operations. It may put pressure on Williams to return to the negotiating table. For now, ETE seems more hostile to the deal than its reluctant seller ever was.

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Energy Transfer Equity said on March 23 that it expects to generate $170 million of EBITDA by 2020 from commercial synergies achieved through buying rival pipeline owner Williams Companies, a reduction of more than 90 percent from the $2 billion it forecast in September 2015.

ETE blamed a fall in oil and gas prices for the downward revisions.

In another reversal from earlier indications, the company said Williams’ presence in Oklahoma would need to be “significantly reduced.”

Since Energy Transfer first made its offer on June 22, 2015, its shares have fallen 61 percent while Williams’ are down by 68 percent. The companies agreed to merge on Sept. 28.

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