Williams Cos. (WMB): Potential Momentum Acquisition - News Report Not Surprising, but Focus on BTM Funding Read-Through

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Williams Cos. (WMB): Potential Momentum Acquisition - News Report Not Surprising, but Focus on BTM Funding Read-Through

Goldman Sachs Williams Cos. (WMB)

Northern stretch of the basin in Louisiana. On Gulf Coast connectivity, a transaction

could consolidate southbound egress by combining WMB’s 1.8 Bcf/d LEG pipeline with

Momentum’s 1.7 Bcf/d NG3 pipeline, giving WMB a dominant market share of ~3.5 Bcf/d

in regional transport capacity to the Gillis hub. Elsewhere, we will look for details on

power generation demand and opportunities in the region, as WMB remains focused on

building out its gas supply + power generation business and Momentum’s current

footprint connects to 26 power plants.

Focus on balance sheet implications and behind-the-meter funding outlook. While

we take no view of a potential transaction, if we assume a multiple of 10-11x EBITDA

(consistent with similar gas pipeline transactions with similar growth outlooks) on the

potential $5.5 billion transaction, the acquisition could imply incremental 2027 EBITDA

of ~$500-$550m. However, leverage would screen tighter at 4.3-4.4x (assuming for

illustrative purposes that the deal is 100% debt financed) vs 4.1x in our current model.

For context, leverage capacity had already screened tight through 2027, above

management’s 4x target given near-term capex requirements for the ongoing power

innovation buildout, before contemplating impacts from M&A. Specifically, in line with

commentary from the 1Q26 call, WMB noted 2026 leverage is expected to be at 4.1x in

2026, and 2027 looks similarly tight (4.1x in our model). However, management was

clear on both the 1Q26 call and at the recent EIC conference that they are evaluating

financing options that could alleviate short-term leverage tightness including: 1)