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Williams Partners L.P. (



Q4 2011 Earnings Call

February 23, 2012 11:00 pm ET


Travis Campbell - Head, IR

Alan Armstrong - Chairman & CEO

Rory Miller - SVP - Midstream and Director of Williams Partners GP LLC and President of the Midstream Business Unit


Stephen Maresca - Morgan Stanley

Ted Durbin - Goldman Sachs

Louis Shamie - Zimmer Lucas



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Good day and welcome to the Williams Partners fourth quarter 2011 earnings release conference call. Today's call is being recorded. At this time for opening remarks and introductions I would like to turn the call over to Mr. Travis Campbell. Please go ahead sir.

Travis Campbell

Thank you and good morning everybody. Welcome to our year end 2011 call. Thanks for your interest in the company. As you no doubt are aware, we released our results yesterday afternoon after the market closed. Also yesterday Alan using a few slides and some commentary about the results. That audio commentary and the slides are available on the website. So on the website you should be able to find the earnings presentation and the audio commentary, the podcast by Alan, the data book that we always provide, that contains the usual information, the press release and our analyst package.

Since we did the commentary yesterday, the call today should be fairly brief and we will get to your questions very quickly. In a minute, Alan Armstrong, the CEO and Chairman will make some brief comments after which we will open the lines for questions. Be aware though that all the business unit heads are here and available to respond to any questions.

With me is Rory Miller who oversees Midstream and Randy Bernard who heads up the Gas Pipes as well as Don Chappel the CFO. On yesterday’s presentation and in the data book there is a disclaimer on forward-looking statements that is important. Please read it. Also there are non-GAAP numbers included in the presentations, they've all been reconciled back to Generally Accepted Accounting Principles. Those reconciliations are available as well. So with that I will turn it over to Alan.

Alan Armstrong

Great, thank you Travis and good morning again to those of you who have joined us for the WMB call and first of all I would just like to point out another great quarter and certainly a great year for WPZ.

Segment profit plus DD&A growing in the fourth quarter from 574 million in 2010 to $671 million here in the fourth quarter of 2011. And of course our DCF for the full year growing from $1164 million in 2010 up to $1650 million here in 2011. So a great growth and as you can see from the scheduled opportunities that I spoke to in some of the slides and the slides from yesterday continue to increase our opportunity pipeline larger and larger. And I think probably the key note of our change in opportunities and capital guidance coming from our third quarter release to now, really a lot of that growth is coming in our Gas Pipeline segment as we are seeing a lot of demand for increased growth on the Transco system to take advantage of ample supplies of natural gas.

And certainly the industry in general is getting more and more convinced to that being the case and so we are very excited that we happen to have an asset that lay smacked out in the middle between great supply resources and great market demand. And so feeling very fortunate to have the capabilities and the assets that we have in this environment.

So a continued great growth story, you will notice that we have changed our guidance on the commodity prices and you will notice a very conservative I would say relative to our peers. In terms of our pricing forecast, we are going to a very high crude-to-gas ratio, but a very low NGL-to-crude ratio. And so the result of that is a slight increase in NGL margins in 2012 just because we had such low crude oil earlier but a slightly lower NGL margin expectation in 2013.

And we have got that NGL crude ratio in this guide. It’s all the way down to 45% at midpoint and I would just say that we certainly are impacted by kind of what we are seeing in the current market, but as well when you do have very high crude-to-gas ratios, you do tend to see that NGL-to-crude ratio is slipping and that is why that is in our guidance like that.

Having said all that, I would tell you that it's pretty impressive to see the kind of growth that we've got where we have got a slip of over 15%. In our NGL margin, yet we are showing this kind of continued growth in our cash flow. So I think it speaks to the resilience of our portfolio and as well the real strong increases in fee-based cash flows that we continue to pursue in our business.

So very excited about the opportunities and excited about how we performed in 2011 and our guidance into 2012 and 2013. And with that we will turn it over to questions.





(Operator Instructions) And we will go first to Stephen Maresca with Morgan Stanley.

Stephen Maresca - Morgan Stanley

First question just a bigger picture and Alan just your views on how if at all concerned impactful the weak gas market is on your Marcellus development at all and may be some more just update on the Atlantic Access project, but just a bigger picture I mean, if we stay in this weak environment, does that change the opportunity set in that region for you guys?

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