Williams Cos Swings to Profit on Strength of Pipeline Business

   By Tess Stynes 
 

Williams Cos. (WMB) swung to a fourth-quarter profit, with a boost from its recently merged master-limited partnerships, though its pipeline business lowered its 2015 outlook.

Williams recently completed the merger of two MLPs it controls--William Partners and Access Midstream Partners--into one giant natural-gas pipeline system under the Williams Partners name.

The new Williams Partners also cut its guidance for 2015 earnings before interest, taxes, depreciation and amortization to $4.5 billion, from its previous view of about $5 billion, citing sharply lower assumptions for commodities prices.

Like many pipeline companies, Williams Partners generates revenue from fees, reducing some of the direct exposure to the recent volatility of oil and gas prices. However, investors in the sector have been concerned that low prices will lead to reduced production in the industry. Many oil and gas producers have reduced their 2015 capital budgets, with some announcing layoffs. Earlier this month, Plains All American Pipeline LP lowered the midpoint of its 2015 profit guidance, also citing weak commodity prices.

Williams Partners, a major pipeline company based in Tulsa, Okla., has sought to increase its presence in shale formations where drillers are using new technologies to produce more oil and natural gas. Access Midstream gathers natural gas and natural-gas liquids pumped from wells in Texas, Pennsylvania and Oklahoma, processes them and delivers them to larger pipelines.

Chief Executive Alan Armstrong said that in the latest quarter Williams Partners' fee-based revenues continued to grow and the company began commissioning major new assets, including Gulfstar One, Keathley Canyon Connector and its expanded Geismar plant.

"However, the sharp decline in commodity prices, the delay in the startup of Geismar and higher costs associated with the commissioning of these large-scale assets, reduced our overall results," Mr. Armstrong said.

Overall, Williams Cos. reported a profit of $193 million, or 26 cents a share, compared with a year-earlier loss of $14 million, or two cents a share, a year earlier. Excluding including impacts related to its Geismar plant and the merger of Williams Partners and Access Midstream and other items, per-share earnings from continuing operations fell to 16 cents from 22 cents. Analysts polled by Thomson Reuters most recently projected per-share earnings of 23 cents.

Write to Tess Stynes at [e-mail]

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