Williams and Williams Partners Announce 2016 Capital and Financing Plan, Cost Reductions and Fourth Quarter Operational Update
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WPZ 4Q Cash Distribution Coverage at Approximately 1.0x, Declares
Distribution of $0.85, Consistent with Prior Quarter
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4Q Operational Results Solid; Plan to Report Full 2015 Financial
Results Feb. 17
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WPZ 2016 Growth Capital Funding Needs Reduced Approximately $1
billion, or 32%, to $2 billion
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Plan Includes Significant Reductions in Annual Costs
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Transco Issues $1 Billion in Notes; WPZ to Eliminate 2016 Equity
Needs with Planned Asset Monetizations
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Partnership Does Not Plan to Issue Public Equity or Debt in 2016
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Reaffirming Intent to Maintain WPZ Investment-Grade Credit Rating
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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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