Morningstar | Williams Reports Decent Quarter; Ups Capital Expenditure Guidance Due to DJ Basin/Four Corners
Williams reported a decent quarter, reflective of its steady progress toward executing on a profitable list of pipeline and gathering and processing investments. We plan to maintain our fair value estimates and narrow moat ratings ahead of the shareholder meeting on Aug. 9 where we expect the merger of Williams and Williams Partners to be approved and close shortly thereafter. Adjusted EBITDA of $1.1 billion was up about 6% from last year's results excluding asset sales already completed, driven primarily by Transco expansion projects brought online. Similarly, distributable cash flow of $705 million was a slight improvement from last year's $698 million, and a coverage ratio of 1.17 times all line up well with our expectations. Offsetting the improvements was a $36 million EBITDA decline from William's deepwater Discovery joint venture where volumes have declined significantly with no expected recovery in the near term.Looking forward, the Atlantic Sunrise expansion project stands out with the 1.7 bcf/d expansion due in service in the second half of August. The project is another critical pipe that will move Marcellus gas to markets in the Mid-Atlantic and southeastern states. We estimate the contracted volumes on the pipeline itself will generate around $250 million to $300 million in incremental EBITDA. There are also additional fees earned from incremental G&P volumes, particularly as Williams has nearly 90% G&P market share in the Susquehanna and Bradford counties, which are key sources of gas for the pipeline. Needless to say, we think this pipeline will generate attractive returns on investment for Williams.
With the recent transactions (acquiring DJ Services assets and deposing of Four Corners assets), 2018 and 2019 capital expenditure guidance has been ramped up to $3.9 billion and $2.6 billion from $3.1 billion and $2.4 billion, respectively. We consider these expectations realistic.
Williams Partners is an energy infrastructure company that engaged in the gathering, processing and interstate transportation of natural gas and natural gas liquids. The company operates in four business segments: Northeast G&P, which include natural gas gathering, compression, processing and NGL fractionation business in the Marcellus and Utica Shale regions; Atlantic-Gulf, which includes the Transco interstate natural gas pipeline that extends from the Gulf of Mexico to the eastern seaboard; West, which includes the Northwest Pipeline interstate natural gas pipeline; and natural gas liquids & Petchem Services, which operates an ethylene storage hub.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.