Williams Companies, Inc. (The) (WMB)

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Williams Companies, Inc. (WMB)

Q1 2010 Earnings Call

May 5, 2010 9:30 a.m. ET


Travis Campbell - Head, IR

Steven Malcolm - Chairman, President and CEO

Ralph Hill - President, E&P

Alan Armstrong - President, Midstream Gathering & Processing

Phillip Wright - President, Gas Pipeline

Don Chappel - Senior Vice President, CFO


Steven Maresca - Morgan Stanley

Carl Kirst - BMO Capital

Holly Stewart - Howard Weil

Faisel Khan - Citi

Craig Shere - Tuohy Brothers Investment Research

Andrew Gundlach - ASB Holdings


Travis Campbell

Thank you. Good morning everybody. Welcome to our first quarter call and as always thanks for your interest in the company. Steve Malcolm will be doing the presentation then we will review the few slides that we have. Be aware though, that all of our business unit heads are here and available for questions that will take right after Steve's comments. Also as usual, we've put together our data book which includes the normal information we provide each quarter. So, this morning, on the website williams.com, you should be able to find the slides, the data book, the press releases and the 10-Q, which was filed this morning as well.

At the beginning of the slide deck is the forward-looking statements on slide number two and the disclaimer on oil and gas reserves on slide number three. Those are important and integral to our remarks this morning, so please review those. Also included are various non-GAAP numbers which have been reconciled back to Generally Accepted Accounting Principles. Those schedules are available and follow the presentation.

As I suspect the call today should be rather brief because as you know we will be hosting the Analyst day in New York next Tuesday. At that time, all of our senior management will be there to go into a much more robust look at each of our businesses.

So with that, I'll turn it over to Steve.

Steve Malcolm

Thank you, Travis. Welcome to our first quarter call. Thank you for your interest in our company, and as Travis mentioned our discussion today should be very crisp as we are looking forward to our analyst and investor day next week in New York, and at that we will be talking more about strategies and tactics and the various growth opportunities at that meeting.

So, this would be pretty quick, so looking at the first slide, slide four. A few of our first quarter results and accomplishments of course, first quarter recurring adjusted earnings per share is $0.36, which is up 64% over the first quarter of '09 results as well recurring segment profit of $589 million; it's 43% higher than our ' 09, first quarter.

We increased our quarterly dividend by 14%. Of course, we completed our transformational transaction, which created a much larger WPZ. We've grown our position to Marcellus by adding another 11,000 acres in Columbia County, Pennsylvania, which brings our total acreage position in the Marcellus to above 45,000 acreage at a weighted average cost of about $2800 per acre.

Began startup operations at Perdido Norte in the Western deepwater Gulf of Mexico, and I believe on Monday of this week we brought Transco's Mobile South expansion project into service adding deliverability to Southern markets.

Turning to slide five, we are offering guidance for 2012 for the first time, but this shows that we are all about returning to significant value creation. Let me go through the prior guidance here. In 2010, our prior guidance mid-point was $1.35 you see here were to $1.28, and that's driven by obviously changes in our commodity price assumptions.

Crude oil from $75 to $80, but Henry Hub nat gas from $575 to $450, and so that creates the change that we're reflecting here. As well, in 2011, $1.83 versus $1.87, driven by an increase in crude oil prices from $80 to $86, but nat gas going from $650 to $550.

And then we're showing for the first time again, mid-point guidance for 2012 of $2.38, that all represents about a 36% CAGR with respect to our earnings per share. Slide six, please, shows the higher segment profit growth and shows the relative contributions by WPZ and our E&P business.

And overall, you see a 78% increase in total recurring adjusted segment profit over this period of time. Slide seven, we've talked about our many growth opportunities, and as you see here, we're expecting to invest over $5 billion in growth in the 2010, 2012 timeframe. This slide is one that the investors are appreciative of, in that we do break out our capital by business unit and by category -- capital for maintenance of facilities, capital for maintenance of volumes and growth projects.

So, obviously, a lot of wonderful, exciting growth opportunities during this three year timeframe. Slide eight just gives you -- reminds you of our premier E&P portfolio, anchored by our position in the Piceance. And we are a proven optimizer of resource plays; year-after-year, a leader in terms of costs. We believe that the Piceance is competitive with the best of the Shale plays.

And I think we have a unique portfolio that allows us to ramp-up or ramp-down, depending on the price signals that the market is offering. Slide nine; if you look at all three of our business units, probably there are more growth opportunities in the midstream space. And again, we'll talk more about these in New York next week, but looking at this map, we have the growth opportunities in our traditional basins.

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