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 January 25, 2016 - 8:05 AM EST
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Williams and Williams Partners Announce 2016 Capital and Financing Plan, Cost Reductions and Fourth Quarter Operational Update

  • 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.

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.

Media Contact:
Tom Droege, 918-573-4034
Investor Contacts:
John Porter, 918-573-0797
Brett Krieg, 918-573-4614

Source: Business Wire (January 25, 2016 - 8:05 AM EST)

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