Williams Partners has agreed to acquire Cabot Oil & Gas’ midstream assets located in the Marcellus Shale formation of Susquehanna County, Pennsylvania, for $150m.

The company said that this is in line with the company’s strategy to expand its midstream business in the Pennsylvanian formation.

The Cabot assets include approximately 75 miles of gathering pipelines and two compressor stations.

The transaction is expected to close during the fourth quarter, subject to normal and customary closing conditions and regulatory clearance.

In addition, Williams Partners has added more than $150m of expansion capital to fund the 2011 construction phase of additional gathering assets, including compression and dehydration, which will significantly augment the acquired assets.

The partnership will continue to invest additional capital beyond 2011 to further expand the system and the combined gathering system will be capable of delivering approximately 1.2 billion cubic feet per day (bcf/d) of natural gas over the next two to three years.

The new system will connect with Williams Partners’ earlier reported Springville gathering pipeline in Susquehanna County. It will significantly expand the Springville system, as well as add additional delivery points.

The partnership has also agreed to a new long-term dedicated gathering agreement with Cabot for its production in the northeast Pennsylvania area of the Marcellus Shale.

The 25-year agreement covers an area of mutual interest that currently includes 138,000 gross acres.

The Springville system is currently in the construction phase and is expected to be operational in mid-2011.

The acquired Cabot assets are currently gathering approximately 230 million cubic feet per day (mmcf/d) of Cabot’s natural gas production.

Construction will begin on the additional expansions to the Springville system and other new areas in 2011.