Saturday, May 22, 2010

Williams Companies (NYSE:WMB) a Takeover Target?

Although there are no known overtures from giant oil and gas companies to woo Williams Companies (NYSE:WMB), the way the market will probably go over the long term makes them a possible target in the future.

What Williams does is produce and transport gas in a number of regions in the U.S. and Canada, and even though the price of natural gas has downward pressure on it, that won't necessarily cut into their transport costs, as natural gas will have to be moved, no matter what the price is at the moment.

So on the transportation side they are probably more attractive than on the production, which has an enormous number of competitors, as well as supply for many years.

With energy companies gravitating toward oil because of the vast supply of natural gas, Williams may not be as attractive as some think they are, unless they expand the transportation business to make it so.

For a large company looking to expand their natural gas play in the future, Williams could be a potential and attractive candidate in that regard, although they'll probably have to wait until the natural gas prices rise, which could take some years to do.

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