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Williams Partners CEO Discusses Q3 2010 Results - Earnings Call Transcript

Williams Partners CEO Discusses Q3 2010 Results - Earnings Call Transcript

Williams Partners, L.P. (

WPZ

)

Q3 2010 Earnings Call

TST Recommends

October 28, 2010 11:00 am ET

Executives

Sharna Reingold - IR

Steve Malcolm - Chairman & CEO

Alan Armstrong - SVP of Midstream & President, Midstream Business Unit

Analysts

Stephen Maresca - Morgan Stanley

Darren Horowitz - Raymond James

Yves Siegel - Credit Suisse

Gabe Moreen - Bank of America Merrill Lynch

Ted Durbin - Goldman Sachs

Jet Theriac - George Weiss Associates

John Tysseland - Citigroup

Sharon Lui - Wells Fargo

Craig Shere - Tuohy Brothers Investment Research

Presentation

Operator

Compare to:
Previous Statements by WPZ
» Williams Partners L.P. Q2 2010 Earnings Call Transcript
» Williams Partners, L.P Q1 2010 Earnings Call Transcript
» Williams Partners L.P. Q4 2009 Earnings Call Transcript
» Williams Partners L.P. Q3 2009 Earnings Call Transcript

Good day everyone and welcome to the Williams Partners LP Third Quarter 2010 Earnings Release Conference Call. Today’s call is being recorded. At this time, for opening remarks and introductions, I’d like to turn the call over to Ms. Sharna Reingold, Director of Investor Relations. Please go ahead.

Sharna Reingold

Thank you, David and good morning everyone. Welcome to the Williams Partners third quarter 2010 earnings call. Thank you for your interest in the company. We do have a few slides to go over in our presentation this morning.

Steve Malcolm will be going through those in just a minute. After Steve’s remark, we will open the line for questions, and be aware that Alan Armstrong, Don Chappel and Phil Wright also here and available for questions.

Before I turn it over to Steve for his remarks, please note that all the slides are available in a PDF format on our website, williamslp.com. Please read slides two within the presentation. They are forward-looking statements about the future expectations and operations that are subject to the various risks and uncertainties, which are disclosed on those slides.

Also included in this presentation today are various non-GAAP numbers that have been reconciled back to measures included in Generally Accepted Accounting Principles. Those reconciliation schedules and related information are included in the slides available on our website, williamslp.com. With that, I’ll turn it over to Steve.

Steve Malcolm

Thank you, Sharna, and welcome to the call, and thanks for your continuing interest in our company. Starting on slide four, the financial results, which are very good. Third quarter net income is 226 million or $0.63 per common unit. Distributable cash flow for the third quarter is 240 million. 2010 year-to-date distributable cash flow of 972 versus prior year of 908, so we’re up 7% year-to-date. Year-to-date and full year 2010, DCF and coverage ratios remained strong, and 2010 year-to-date adjusted segment profit of over $1 billion versus 2009 of 880 yields a 22% higher number for 2010. So, good-good financial results.

The highlights are shown on page five, some of the operating highlights, transaction highlights. So, we did agree up to buy the Piceance gathering and processing from Williams. I have a slide later on that one, which I will save any further comments about that. We’re making progress on our Marcellus Shale opportunities, and again, there’s another slide later, which I’ll use to talk in more detail about that.

We closed and financed the Overland Pass pipeline transaction. There was strong demand for WPZ’s share during that offering. We completed the restructuring transaction with the PZMZ merger. We brought the new Echo Springs TXP4 into full operation at the end of the quarter.

I think it’s good to note that we placed that into service two months ahead of schedule and significantly under budget. And that train adds approximately 350 million a day of natural gas processing and 30,000 barrels per day of natural gas liquids production, roughly doubling the existing capacity on both cases.

We’re preparing for the November start-up of Sundance Trail expansion on northwest pipeline. We’re pleased to see the end of Gulf of Mexico drilling moratorium, and obviously people are still, producers are still wondering how that this is going to all play out, but we still see a lot of opportunities in the Gulf, and see this as a first step to getting those activities back on stream. Increased the distribution by $0.015 and we did announce the leadership succession where Alan Armstrong will be taking over as Chairman and CEO.

Slide six please. This simply gives the commodity price assumption, ranges and mid points for Henry Hub and Rockies gas, crude oil and NGL margins in the NGL – the very important NGL to crude oil relationship. And really these numbers, these assumptions are unchanged from those that we talked about at the Barclays conference.

Slide seven. We expect strong growth during the guidance period as is shown on this graph with the distribution coverage ratio increasing adjusted segment profit moving in the right direction. DCF, and you see CapEx in the lower right hand corner, and of course 2010 capital is up because of the most recent bar gas or Piceance acquisition.

Slide eight. We’re expected to invest over $2 billion in growth in the 2010 through 2012 period. This breakout shows capital dollars for maintenance of facilities for maintenance of volumes and then growth projects, and again the 2010 blue bar is increased by $782 million for the bar gas transaction.

Slide nine, our ever familiar pie charts, and we’ve had great success in moving projects from the left to right. We’ve had great success in capturing more and more projects over time. And as you can see, as you look at these graphs, at these pie charts, we see significant opportunity onshore out west, in the midcontinent Marcellus, and still a lot of activity in the Gulf, a lot of ongoing negotiations and ongoing opportunities.

Slide 10, I told you I would get back to Marcellus. This is probably our most exciting opportunity, really lot of deal flow. We’ve talked about all of the confidentiality agreements that we have in place. We’re rapidly expanding the Laurel Mountain midstream gathering system. Projects there will ultimately provide 1.5 Bcf a day of gathering capacity, 1,400 miles of gathering lines, including 400 new miles of large diameter pipe.

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