Williams Companies, Inc. (The) (WMB)

WMB 
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Williams Companies (WMB)

Q1 2011 Earnings Call

May 05, 2011 9:30 am ET

Executives

Alan Armstrong - Chairman of the Board, Chief Executive Officer, President, President of Midstream Gathering & Processing, Chairman of Williams Partners GP LLC and Chief Executive Officer of Williams Partners GP LLC

Donald Chappel - Chief Financial Officer and Senior Vice President

Travis Campbell - Head of Investor Relations

Rory Miller - Senior Vice President of Midstream

Ralph Hill - President of Exploration & Production

Analysts

Craig Shere - Tuohy Brothers Investment Research, Inc.

Holly Stewart

Theodore Durbin - Goldman Sachs Group Inc.

Carl Kirst - BMO Capital Markets U.S.

Faisel Khan - Citigroup Inc

Unknown Analyst -

Presentation

Operator

Good day, everyone, and welcome to you Williams Companies First Quarter 2011 Earnings Release Conference. At this time, for opening remarks and introduction, I would like to turn the call over to Mr. Travis Campbell, Head of Investor Relations. Please go ahead, sir.

Travis Campbell

Thank you. Good morning, everybody. Welcome to our First Quarter 2011 Earnings Call. As always, thanks for your interest in the company. As you no doubt know, we released our results yesterday after the market closed. Also yesterday, Alan, using a few slides, had some commentary about the results, our increased guidance and our growth opportunities. That audio commentaries and slides are available on the website, and because of that review yesterday, we'll not be reviewing the slides again this morning. So on our website, williams.com, you should be able to find a number of things that were posted yesterday afternoon. The first, the earnings presentation with the audio commentary by Alan. Second, the data book that contains the usual information made available every quarter. Third, the press release of the first quarter results. Fourth, our analyst package. And finally, a podcast of Alan's remarks yesterday.

Also for your information. The first quarter 10-Q will be filed today. Because we reviewed these items yesterday, I expect the call today will be very brief and we'll get very quickly with your questions. In a minute, Alan Armstrong, our President and CEO will make some general comments, after which, we'll open the lines for questions.

Be aware, as always, all of our business heads are here and available to respond to your questions after Alan's remarks. Here with me are Ralph Hill, who heads up the E&P Company; Rory Miller, who oversees the Midstream Company; and Randy Bernard, who heads up the gas pipeline. Also, Don Chappel, the CFO is here as well.

As most of you are aware, last Friday, we announced that our wholly owned subsidiary, WPX Energy, Inc., filed a registration statement related to the proposed IPO of its common stock. It has a security law restriction, we will not be commenting at all on WPX Energy Inc. today.

There are forward-looking statements on Slide 2 and 3 and disclaimer on oil and gas reserves on Slide 4, at yesterday's presentation. Those are also included in the data book. They're important and integral to the company and you should review those.

Also, there are non-GAAP numbers included in these various presentations. Those have all been reconciled back to Generally Accepted Accounting Principles and their reconciliation schedules are also available. So with that, I'll turn it over to Alan.

Alan Armstrong

Great. Good morning and thanks for joining us this morning. I'll just very briefly capture the highlights and key notes on what was put out as in recording yesterday and in the slide material. First of all, we're very excited to tell you we're raising guidance, and this is based on both higher crude price expectations. We are now at $95 midpoint for '11 and '12 crude. And of course, that's still well below the hoard market and current pricing for crude. And current NGL margins, of course, are being lifted on that. And in fact, current NGL margins are actually just beyond the high end of range of what we have posted right now.

Also, we have greater confidence on timing and performance on a number of new projects that are going to add to the balance in 2011. So we are raising guidance for both '11 and '12 and you can see the details of that now at a -- our midpoint for '11 is now $1.55 per share on an adjusted earnings basis.

In the current quarter, we had mixed results to combine and produce a very solid quarter. Our gas gathering and production volumes were negatively impacted by severe winter weather primarily in the Rockies and the Bakken. With the Bakken receiving near record snowfalls. And of course, low natural gas prices also grow low quarter-over-quarter results in E&P.

However, our Midstream Canada and Olefins segment came through and posted a record quarter that help to mitigate the weakness in the gas prices. And our Gas Pipe segment also came through with a strong quarter.

As we look into the second quarter, we are very excited about how our volumes have rebounded and conditions are currently very good for tremendous earnings results for the balance of 2011. Looking to the balance of the year, we now expect our midpoint, as I stated earlier, EPS to be $1.55 and we're going to hit now just some of the key factors that we expect to drive this even better performance for the balance of the year.

First of all, our operating volumes have really rebounded in all of our areas. We expect the balance of the year to be much better as the fruits of our labor in both the Marcellus and the Bakken begin to take hold both on E&P side and in the Marcellus on the WPZ Midstream side. Also, we had some major maintenance to get through in the first quarter at our big opal plant, which is the largest single contributor to our NGL equity volumes.

Read the rest of this transcript for free on seekingalpha.com