Shares of Williams Cos. (NYSE: WMB), the Oklahoma-based operator of a natural gas pipeline system that stretches from Texas into the Southeast and up through the mid-Atlantic region, surged more than 18% Monday on news the company will pay almost $6 billion for the 50% of Access Midstream Partners (NYSE: ACMP) it does not already own.
Units of Williams Partners (NYSE: WPZ), the master limited partnership with natural gas gathering and processing operations in the Marcellus and Utica shales, gained more than 7%. At the close of trading on Friday, June 13, the 55.1 million LP units Williams is acquiring had a market value of $3.6 billion, according to a statement released by the company.
News of the Williams deal to acquire Access Midstream ignited a rally among MLP exchange traded products. Three of the top-10 ETPs on a percentage basis Monday are MLP plays, including the leader of the pack, the Global X MLP & Energy Infrastructure ETF (NYSEArca: MLPX).
MLPX, which recently crossed the $100 million in assets under management mark, is up 2.2% and hit a new all-time earlier Monday. [Global X Income ETFs See Assets Surge]
Williams Cos. Is MLPX’s second-largest holding at a weight of 8.95% while Access Midstream represents 1.1% of the ETF’s weight, according to Global X data. MLPX is just 10 months old and already has almost $132 million in assets under management. The ETF doesn’t hold more than 25% of its holdings in MLPs due to regulatory restrictions. However, since MLPX is structured as a Regulated Investment Company or Unite Investment Trust, the fund is eligible to pass taxes on capital gains, dividends or interest earned directly to clients or individual investors.
This process helps protect investors from double taxation where the company and individual investors would be taxed. [MLP ETF Taxes: An Important Issue]
The First Trust North American Energy Infrastructure Fund (NYSEArca: EMLP) is up 1.3% and like MLPX, hit a new all-time high earlier in Monday’s session. EMLP, which celebrates its second anniversary late this week, features Williams Cos. as its fifth-largest holding with a weight of 3.3%. Williams Partners and Access Midstream combine for about 0.75% of EMLP’s weight.
The actively managed EMLP was the first RIC-compliant MLP product that doesn’t dilute the tax benefits of holding individual MLPs. However, by limiting MLP holdings to 25%, the ETF includes other energy infrastructure firms with similar characteristics to MLPs. [MLP ETFs Address Tax Concerns]
Even with the cap on MLP exposure, EMLP has a distribution rate of 3.41% and has raked in almost $749 million in assets in just two years of trading, according to First Trust data.
First Trust North American Energy Infrastructure Fund
ETF Trends editorial team contributed to this post.