Williams Partners L.P.
) has registered first-quarter 2012 earnings of 85 cents per
limited-partner unit, showing an improvement from the year-ago
profit level of 81 cents by 4.9%. However, the results were below
the Zacks Consensus Estimate of 90 cents.
Higher natural gas liquid (
) margins in the partnership's midstream business as well as higher
fee-based revenue in both the midstream and gas pipeline businesses
led to the significant year-over-year improvement.
Total revenue increased nearly 7% year over year to $1,685.0
million, but failed to meet the Zacks Consensus Estimate of
Notably, Williams Partners' distributable cash flow (DCF)
attributable to partnership operations witnessed an improvement to
$475 million from $441 million recorded in the year-ago quarter.
Superior results in the midstream and gas pipeline operations led
to an 8% DCF growth.
Recently, the partnership increased its quarterly cash
distribution 8.4% year over year to 77.75 cents per unit.
Consolidated adjusted segment profit was $489.0 million, up
almost 12% from the year-ago level of $437.0 million.
The segment reported profits of $180.0 million, showing an
improvement of nearly 3% year over year. Higher transportation
revenues related to expansion projects that began operations in
2011 drove the improvement.
Midstream Gas & Liquids
The segment's profits increased 17.6% year over year to $308.0
million, owing to higher NGL margins as well as a 19% improvement
in fee-based revenues.
The segment's fee-based revenues experienced a major boost on
higher volumes in the partnership's Susquehanna Supply Hub area of
the Marcellus Shale. The acquisition of the Laser Northeast
Gathering System in Marcellus Shale from Delphi Midstream Partners,
LLC for approximately $750 million also contributed to the results.
Again, higher volumes on the Perdido Norte gas and oil pipelines in
the deepwater Gulf of Mexico, gathering volumes in the West also
added to this.
Williams Partners has reaffirmed its 2012 and 2013 adjusted
segment profit as well as capital expenditure guidance that reflect
the partnership's Caiman acquisition.
Taking into account potential contributions from the Caiman
acquisition, Williams Partners had earlier boosted its expectation
for its regular cash distribution to limited-partner unit holders
for 2013. It expects to deliver about 8% annual growth for 2012 and
8-10% for 2013 and 2014.
The partnership expects its total adjusted segment profit in the
range of $1,780-$2,270 million for 2012, $2,025-$2,525 million for
2013 and $2,125-$2,675 million for 2014. The capital expenditure
for 2012 and 2013 is expected around $2,770 million and $3,270
million, respectively. However, Williams Partners boosted its 2013
capital expenditure guidance by $75 million to $3,150 million at
guidance midpoint, to reflect the inclusion of Virginia Southside
expansion project on Transco.
We believe William Partners is well positioned for future growth
owing to its geographically diverse assets, a sizable project
backlog as well as a sound distribution history.
Moreover, its gas pipeline and midstream businesses continue to
progress on a number of ongoing organic expansion projects, along
with major growth projects in the Gulf of Mexico, Marcellus Shale
and Piceance Basin. The new Constitution Pipeline joint venture and
the completion of the Laser Northeast Gathering System acquisition
are major milestones for the development of Susquehanna Supply Hub,
a major natural gas supply hub in northeastern Pennsylvania.
In March, Williams Partners agreed to buy a midstream unit −
Caiman Eastern Midstream LLC − of Caiman Energy for $2.5 billion in
cash and equity. The deal will significantly increase Williams
Partners' footprint in the Marcellus Shale region. The transaction
will entitle the partnership to collect more than 2 billion cubic
feet of natural gas per day (Bcf/d) and produce about 300,000
barrels per day (bbl/d) of natural gas liquids by 2020 from the
Caiman pipeline system. The partnership also highlighted that it
intends to join Caiman in developing processing facilities in the
Utica Shale, in Ohio and northwestern Pennsylvania.
The partnership currently holds a Zacks #3 Rank, which is
equivalent to a short-term Hold rating.
Williams Partners is an energy master limited partnership
engaged in gathering, transportation, treating and processing of
natural gas as well as fractionation and storage of NGLs. The
general partner of the partnership is owned and managed by
Williams Companies Inc.
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