Williams and Williams Partners Announce 2016 Capital and Financing Plan, Cost Reductions and Fourth Quarter Operational Update
January 25 2016 - 8:05AM
Business Wire
- WPZ 4Q Cash Distribution Coverage at
Approximately 1.0x, Declares Distribution of $0.85, Consistent with
Prior Quarter
- 4Q Operational Results Solid; Plan to
Report Full 2015 Financial Results Feb. 17
- WPZ 2016 Growth Capital Funding Needs
Reduced Approximately $1 billion, or 32%, to $2 billion
- Plan Includes Significant Reductions in
Annual Costs
- Transco Issues $1 Billion in Notes; WPZ
to Eliminate 2016 Equity Needs with Planned Asset
Monetizations
- Partnership Does Not Plan to Issue
Public Equity or Debt in 2016
- Reaffirming Intent to Maintain WPZ
Investment-Grade Credit Rating
- Williams’ Board Remains Committed to
Completing Merger with ETE in a Timely Manner
Williams (NYSE: WMB) and Williams Partners (NYSE: WPZ) today
announced Williams Partners 2016 growth capital funding needs total
$2 billion, down approximately $1 billion, or 32 percent, from the
partnership’s previous plans. The reduction in 2016 capital and
investment expenditures reflects project deferrals, delays and
cancellations resulting from the current commodity price
environment as well as sharply higher costs of capital. On a
GAAP-basis, including consolidated joint ventures, planned growth
capital has been reduced by $1.2 billion to $2.1 billion.
“Our strategy remains intact and the underlying fundamentals of
our business are strong despite the slower growth rates producers
currently face,” said Alan Armstrong, chief executive officer of
Williams Partners’ general partner. “We continue to execute on
critical demand-driven infrastructure projects that serve the
long-term natural gas needs of local distribution companies,
electric power generation, LNG and industrial sources. Our revised
capital plan addresses the realities of our current market
environment while continuing to invest in the growing demand side
of our business.”
The $2 billion growth capital funding needs include $1.3 billion
for Transco expansions and other interstate pipeline growth
projects, most of which are fully contracted with investment-grade
customers. Non-interstate pipeline growth capital funding needs
total $700 million, primarily reflecting relatively modest
additional investments across the partnership’s gathering and
processing systems. Capital spending for gathering and processing
in 2016 will be limited to known new producer volumes, including
wells drilled and completed awaiting connecting infrastructure.
Dramatically reduced growth in production areas, combined with
lower commodity margins and a higher cost of capital, will drive
both lower capital and lower ongoing expenses that we expect to be
significant.
Last week, Williams Partners announced that its Transco
subsidiary raised $1 billion of senior notes to fund capital
expenditures. In addition, WPZ plans to eliminate 2016 equity needs
with planned asset monetizations in excess of $1 billion during the
first half of 2016. The partnership does not plan to issue public
equity or public debt in 2016. The partnership anticipates its
business plan will support its investment-grade credit ratings.
WPZ's liquidity totaled $2.984 billion as of Friday, January 22,
2016.
In fourth quarter 2015, gathered volumes grew across the
partnership’s natural gas gathering and processing operations in
the Northeast and remained stable in the West. The Geismar Olefins
plant operated at nearly 102 percent of its recently expanded
operating capacity for the fourth quarter. Williams Partners
completed construction on Transco’s 525 MDth/d Leidy Southeast
expansion project, the Kodiak tieback to Williams Partners’ Devils
Tower in the deepwater Gulf of Mexico, and the expansion of the
Redwater fractionation facility associated with Williams’ Horizon
Offgas liquid extraction plant in Canada. These new projects are
expected to begin contributing cash flow in first quarter 2016.
Today, Williams Partners announced that the board of directors
of the partnership’s general partner approved a distribution of
$0.85, which is payable on February 12, 2016, to common unitholders
of record at the close of business on February 5. The distribution
is consistent with the prior quarter. The partnership’s fourth
quarter 2015 cash distribution coverage is expected to be
approximately 1.0x, excluding the benefit of the $209 million
incentive distribution rights (IDR) waiver relating to the
termination of the merger agreement between Williams and Williams
Partners.
On January 15, Williams announced that its Board of Directors is
unanimously committed to completing the transaction with Energy
Transfer Equity, L.P. per the merger agreement executed on
September 28, 2015, as expeditiously as possible and delivering the
benefits of the transaction to Williams’ stockholders. Completion
of the pending transaction remains subject to the approval of
Williams’ stockholders and other customary closing conditions.
Williams and Williams Partners plan to announce their financial
results for fourth quarter and year-end 2015 after the market
closes on Wednesday, February 17.
About Williams and Williams Partners
Williams (NYSE: WMB) is a premier provider of large-scale
infrastructure connecting North American natural gas and natural
gas products to growing demand for cleaner fuel and feedstocks.
Headquartered in Tulsa, Okla., Williams owns approximately 60
percent of Williams Partners L.P. (NYSE: WPZ), including all of the
2 percent general-partner interest. Williams Partners is an
industry-leading, large-cap master limited partnership with
operations across the natural gas value chain from gathering,
processing and interstate transportation of natural gas and natural
gas liquids to petchem production of ethylene, propylene and other
olefins. With major positions in top U.S. supply basins and also in
Canada, Williams Partners owns and operates more than 33,000 miles
of pipelines system wide – including the nation’s largest volume
and fastest growing pipeline – providing natural gas for
clean-power generation, heating and industrial use. Williams
Partners’ operations touch approximately 30 percent of U.S. natural
gas. www.williams.com
Portions of this document may constitute “forward-looking
statements” as defined by federal law. Although the company
believes any such statements are based on reasonable assumptions,
there is no assurance that actual outcomes will not be materially
different. Any such statements are made in reliance on the “safe
harbor” protections provided under the Private Securities Reform
Act of 1995. Additional information about issues that could lead to
material changes in performance is contained in the company’s
annual reports filed with the Securities and Exchange
Commission.
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version on businesswire.com: http://www.businesswire.com/news/home/20160125005820/en/
WilliamsMedia Contact:Tom Droege,
918-573-4034orInvestor Contacts:John Porter,
918-573-0797orBrett Krieg, 918-573-4614
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