Williams Profit Falls on Weak Margins, Geismar Plant Effect

   By Tess Stynes 
 

Williams Cos. (WMB) said its first-quarter earnings fell sharply on lower natural-gas-liquids margins.

The year earlier period also included insurance proceeds related to a June 2013 explosion at its Geismar plant in Louisiana.

Williams in February completed the merger of two master-limited partnerships it controls--William Partners and Access Midstream Partners--into one giant natural-gas pipeline system under the Williams Partners name.

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. Earlier this month Williams Partners reached a $575 million deal to buy an additional 21% equity interest in Utica East Ohio Midstream LLC, raising its interest in the company to 70%.

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, the MLP hasn't been immune to pressures from low commodities prices and in February cut its 2015 guidance for earnings before interest, taxes, depreciation and amortization to $4.5 billion. On Wednesday, the company said it expects Ebitda at the low end of its February guidance, citing impacts related to the extended ramp up of the Geismar plant and impacts from low commodities prices on volume and margins.

Chief Executive Alan Armstrong said "first quarter 2015 results showed strong fee-based revenue growth for Williams Partners and we expect the second quarter to be even higher with Gulfstar One and Keathley Canyon Connector nearing full production and additional projects being placed in service."

Overall, Williams Cos. reported a profit of $70 million, or nine cents a share, down from $140 million, or 20 cents a share, a year earlier. Excluding impacts related to the Geismar plant, expenses related to the merger of Williams Partners and Access Midstream and other items, per-share earnings from continuing operations fell to 16 cents from 28 cents.

Analysts polled by Thomson Reuters expected per-share profit of 13 cents.

Williams also affirmed its 2015 dividend guidance and dividend growth estimate through 2017.

Write to Tess Stynes at [e-mail]

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