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Williams Companies Inc. (WMB) Q3 2018 Earnings Conference Call Transcript


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Williams Companies Inc. (NYSE: WMB)
Q3 2018 Earnings Conference Call
Nov. 01, 2018 , 9:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day everyone and welcome to The Williams Companies Incorporated Third Quarter 2018 Earnings Conference Call. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. John Porter, Head of Investor Relations. Please go ahead sir.

John Porter -- Head-Investor Relations

Thanks Todd. Good morning and thank you for your interest in the Williams Companies. Yesterday afternoon we released our financial results and posted several important items on our website. These items include press releases and related investor materials including the slide deck that our President and CEO, Alan Armstrong will speak to you momentarily. Joining us today is our Chief Operating Officer, Micheal Dunn, and our CFO; John Chandler; and Chad Zamarin, is with us as well.

In our presentation materials, you will find an important disclaimer related to forward-looking statements. This disclaimer is important and integral to all of our remarks and you should review it. Also included in our presentation materials are various non-GAAP measures that we reconcile to generally accepted accounting principles and these reconciliations scheduled to appear at the back of today's presentation materials.

And so with that, I'll turn it over to Alan Armstrong.

Alan Armstrong -- President and Chief Executive Officer

Great. Well, thank you John, and thanks everybody for joining us this morning. We are pleased to review with you a very strong quarter for third quarter of '18. We demonstrated continued predictable and sustainable growth in all of our key financial metrics, and we also think this is a great platform for the more dramatic growth that is just begun.

But before we get into presentation, I want to take a moment to officially welcome our new Senior Vice President and Chief Human Resources Officer, Debbie Cowan to Williams. We are really excited to have such an outstanding leader joining us and join our executive officer team. Debbie is an accomplished human resources professional coming to us from Coke Industries, and we're excited to add another great member to our very talented team here at Williams.

I'll pause briefly now and point to our cover slide, which highlights just a couple of the many exciting construction projects that are going on in the company right now. Honestly it's kind of hard to pick because we have so many projects going on. But here on the left-hand side is a photo of the 200-million-a-day Fort Lupton Plant III gas processing plant. So, this is the third train at this Fort Lupton site, and is expected to be in service by the end of this year.

And the photo on the right is from our Oak Grove complex in Oak Grove, West Virginia, where you can see the construction of both TXP-2, which is well under way now as well as TXP-3, which is in the background there. So, there is an exciting time for Williams now, as robust at-risk domestic natural gas demand growth is fueling demand for our fee-based natural gas infrastructure services.

Natural gas usage is growing across almost all categories and is proven to be a good companion fuel for renewables as well as we saw demonstrated this summer. And in fact this summer was a great example of the kind of demand that we are seeing as net power generation was up by 4% or about 15200 gigawatt hour, but natural gas-fired generation was up 17300 gigawatt hour. So, not only did natural gas capture all the growth during the summer period, it also made up for coal and hydro losses as well. So, again it actually outstripped, it got all of the growth and then some in the space. And we are continuing to see that big pool.

In fact if you really study the EIA numbers that just come out recently, you'll see that natural gas has been more than holding its own, even in the face of large investments and renewables, and currently accounts for over 57% of the new generation capacity that's currently in late-stage development. So, it's really interesting to see this emerge and see natural gas starting to become baseload now as well as following load as renewables come online. And so a lot of new renewables, but actually natural gas is outstripping that growth.

So, let me just list the other things, we're going to talk about today real quickly, first off, we'll spend a little time providing perspective on some of the key investor focus areas for Williams, then we'll discuss the key drivers behind our financial and operational metric for the third quarter and year-to-date. And we'll highlight the major project contributions in the third quarter and provide an update on other key achievements that have happened during the period. And I'll wrap up by revisiting how WMB stacks up as an investment, against the broader U.S. market.

So, let's move to Slide Number Two and look at some of those key investor focus areas. First of all, we enjoyed a great quarter with many highlights. But before we get into the details of those results, I want to discuss the strong fundamentals that insulate us from many of the investor concerns in this broader space. And so on this slide, we thought we quickly hit some of the most frequent investor topic and provide our own current perspective on how we stack up against these areas of concern.

So, first of all, we do get a lot of questions on our views of Northeast G&P growth and so that's our fee-based gathering and processing business in the Northeast. And as we all know Atlantic Sunrise is opened up new markets for Marcellus producers, and that is now driving even more accelerated growth in our Northeast G&P business segment. There's a strong demand pool from pipeline commitments and -- Atlantic Sunrise's start-up collapsed the local basis providing much stronger economics to producers in the area.

As an example, on the day that Atlantic Sunrise was placed into service, which was October 6th, Northeast's Leidy gas prices rose from $1.20 Mcf to $2.70 per Mcf. Now that by, in just one day, wouldn't tell you a whole lot, except that gas prices have continued to drift upwards now for the balance of October. So, probably in my career that's been the most significant change that we've seen from any major piece of infrastructure changing entire basin, not just the Leidy gas, but also Dominion South and the Tennessee gas prices as well.

So, where is the Northeast G&P headed? Right now, we're wrapping up our annual budget cycle, where we work closely with producer customers to understand the very specific project needs, that they're going to have over the next few years to make their own business plan. This is a very detailed well-by-well work, which over the few years has led us to internal forecast that have been very accurate. And for example, through September of 2018, we are within 2% of the planned expectations and that's on over 7 Bcf a day of operated volumes with a number of different drivers going on. And so, that's a plan that was generated about this time last year.

So, we do think we have a very good handle on the drivers and right now our forecasting work along with the minimum volume commitments that continue to build, as we build out our facilities, tells us that we should expect steady growth in our Northeast segment amounting to volume CAGR of 15% from 2018 through 2021. And additionally, we also expect to realize significant operating margin uplift during this time, which drive even higher overall growth and EBITDA than that 15% CAGR.

So, as evidence of our improving operating margin, you can actually see it here in the third quarter '18 results versus third quarter '17, where the EBITDA per Mcf, which is a measure we often pointed you to in our Analyst Day that we've seen that now increase in that period again 3Q '17 to 3Q '18 by 8%. So, we are seeing that come through as we had forecasted and as our volumes build, we're going to see more and more of that benefit. So, not only growth in volumes, but even faster growth in our EBITDA.

Secondly, we field questions about our overall EBITDA growth beyond '19 and while we're not providing specific guidance beyond '19, I think we can be pretty clear about our general expectations in this area. As you probably know our guidance for '19 reflects approximately 10% EBITDA growth over '18. We feel comfortable sharing our expectations of approximately 5% to 7% EBITDA growth on the longer term. And of course as we have new projects that growth could improve further, but we have great visibility as we look at our five-year planning cycle, we have great visibility into that 5% to 7% growth, just as the business we have contracted today.

And what's more, this growth is steady and predicable because it's based on fully contracted demand payment projects and our existing fee-based business model that is not impacted by volatile commodity margins. And over the long term it is impacted by natural gas demand and those fundamentals just keep getting better.

So, next up let's talk about leverage. There's been significant deleveraging over the last few years and I can assure you that focus will continue into the future as we move toward a 4.2-times book leverage target over the long term. We have been deleveraging through an asset sale program not by issuing undervalued equity. And as we all understand that is going to drive long-term value and that certainly is the driver as we look at the kind of growth that we're seeing in our EPS right now. So, very focused on the per-share growth metrics and by continuing to go do asset sales that have been very attractive, I think that's the best way to continue to grow shareholder value there.

Our management team focus is focused on very rigid capital discipline. We passed up many opportunities over the last couple of years, where the risk-adjusted returns just no longer match up with our principle focus on improving returns and decreasing our leverage. And this focus is also led to create a portfolio optimization strategies like the sale of assets in a maturing basin in our former Four Corners Area at attractive multiples and redeploying some of that capital to the higher growth DJ Basin. In this transaction, we received an over 13-times multiple highlighting the valuation discount that exists between the public market valuation of our company today and the indisputable market value of even the bottom -- even the bottom quartile of our portfolio.

We announced sale of the Dominion's interest in our Blue Racer Midstream JV just came out this morning. One more piece is evidence to support this assertion, where they quoted on that transaction of 14 to 16 multiple. So, we see people running some of the parts, but it's very clear to us, as we're involved in a lot of these transactions that the private side money is putting a lot more value on these reliable cash flow asset than certainly the public market is right now. And so we will continue to work to take advantage of that situation.

Next up we've definitely heard a lot of confusion in the investment community about this year's FERC actions. The FERC rate making environment appears to weight on the natural gas focus names like Williams. So, I want to remind our investors that our Transco rate case was filed on August 31st with an overall increase in rates. Keep in mind an improvement from 2018 Transco rates would be an upside to what we've provided in our 2019 EBITDA guidance. But also of importance is pointing out that we do not expect our major natural gas pipelines, not Transco, not Northwest pipeline and not Gulfstream to be impacted by the 501-G process. We have seen various writings and people expressing concerns out there, and we're just here to tell you that is not a concern from Williams' perspective.

And finally, we continue to be pleased with our joint venture DJ Basin acquisition. Operationally, the newly renamed Rocky Mountain Midstream is performing well and we're seeing even more growth than we expected. We have sites with permitting under way for greater than 1 billion cubic feet per day of gas processing. And certainly, we've had many questions about the Colorado Proposition 112 based on the incredible importance of the oil and gas industry to the State of Colorado. And the fact that this is a campaign run by out-of-state interest. We tend to think that the measurable not pass or that it will get significant common sense revisions from the senate legislature, if it does that. We've certainly seen that. We've been in Colorado for a long time, not in the DJ Basin, but in other parts of Colorado. And we've seen these kind of things come up before and we've always found the state there to be fairly pragmatic as a whole. And so, so we really feel are not overly concerned. We do think it's a very important issue for the state and for the oil and gas industry and wouldn't try to understate that in any way. But we have seen the state be pretty pragmatic over the years.

But even if it does, we want to make it really clear that 100% of the forecasted wells that are supporting our growth had been permitted through 2020. And over two-thirds of the forecast of 2021 wells have also been permitted. So, really feeling good about the growth that we're seeing in that area and the proactive effort at the producing customers upstream of us have taken to have their wells permitted.

So, thanks for letting us take a little time to share our perspective on these key investors focus areas. And let's move quickly to Slide Number Three and take a look at third quarter '18 results. Lots of numbers on this page. Here with our unadjusted GAAP results in the upper portion of the slide and our normalized numbers in the lower portion. But looking first at our GAAP net income, we've seen improvement of $96 million, increasing to $129 million. This favorable change was due primarily to $227 million increase in operating income, partially offsetting this improvement was an increase in the provision for income taxes driven by valuation allowance on certain deferred tax asset, following the WPZ roll-up.

And turning now to the adjusted metrics, we can see our adjusted EPS of $0.24 was an impressive $0.09, or 60% versus the third quarter of 2017. And adjusted EBITDA grew 7.5% in that period. This improvement was driven primarily by $68 million increase in certain fee-based service revenues, due largely to Transco expansion projects brought online in '17 and '18, and also high -- higher gathering volumes in the Northeast G&P segment.

The quarter also benefited from higher commodity margins in the West. However, these were largely offset by the change to accounting practice on revenue recognition. So, if you normalize WMB's third quarter '17 adjusted EBITDA for the change in the revenue recognition, you would have seen a 10% growth through the same period.

At the business segment level, Atlantic-Gulf adjusted EBITDA increased by $49 million in the third quarter of '18 to $480 million. The improvement reflects a $43 million increase and again in fee-based service revenues primarily on Transco's big five expansion projects were replaced in service in '17 and an additional expansion project placed in the service in 2018.

Our Northeast G&P segment increased by 14%, or $35 million to $281 million and this increase reflects a $33 million improvement in fee-based revenues due to higher volumes at the Susquehanna and Ohio River Systems and improved operating margins as we discussed earlier and we expect both of these trends to continue for quite some time. I might also note that Williams' other segment you can see on the slide includes historical results of our petchem services business.

Now let's move on to Slide Four and take a look at the year-to-date results. Year-to-date net income is down on a GAAP basis by $71 million versus same period in '17. Even though operating income was up by $320 million, the 2018 net income year-to-date is missing a large gain on asset sales that was recognized in March of '17 and that really drove that difference.

Focusing now on these -- on those adjusted metrics, you see down below, we see year-to-date adjusted income per share attributable to Williams was up 45% verses the same time period in 2017. Adjusted EBITDA increased by $70 million to $3.44 billion. Even after the lost EBITDA from the Geismar plant sale and a $65 million unfavorable impact from the adoption of new revenue recognition standards in 2018. All three of our current business segment showed growth over the period -- over the prior year driven by a $233 million increase in service revenues due largely to the Transco expansion projects, as I mentioned earlier and higher gathering volumes in the Northeast G&P segment. So, fairly similar drivers between the third quarter and the year-to-date results.

Now let's move on to Slide Five and take a look here to tremendous accomplishments and solid execution that our teams continue to deliver in a very predictable manner. We are very pleased with the recent announcement of the Leidy South expansion project, which I'll talk a little bit more about here in just a moment.

Very recently the FERC approved the start of construction for our Rivervale South to Market Project that will take place primarily in New Jersey. We are targeting the 2019 to 2020 winter season for completion of this project, which will help meet the growing heating and power generation demand for the Northeastern customers, primarily in New Jersey and New York. So, yet another fully contracted high return project that we have gotten permitted in very difficult territory. So, I would tell you it's no easy task, but our team is very good at it and continues to build a great reputation with regulators.

You may recall we announced our Bucking Horse expansion project with our joint venture partner Crestwood in late July. When finished in 2019 this expansion will increase processing capacity to 345 million cubic feet per day to serve growing customer demand in the Powder River Basin. This growth is on the top of the growth, we are also experiencing in the Wamsutter basin and just to the south in Wyoming's well.

We've already spotlighted our entry in the DJ Basin. That transaction occurred in the third quarter. And on October 1st, we closed the Four Corners sale for $1.125 billion. The cash proceeds contribute to funding our portfolio of attractive growth capital and investment opportunities. And of course, that gain on that sale would be recorded in the fourth quarter.

We completed the Williams acquisition of Williams Partners on August 10th, providing Williams with a simplified corporate structure and streamline governance, while maintaining investment grade credit ratings. Great execution by our corporate teams on that effort. And then most of you know that we placed Atlantic Sunrise project in to service on October 6th. But what you may not know that the Atlantic Sunrise project was awarded the International Association for public participation project -- project of the year award. So, this is a very large international organization that looks at big projects, it require public participation and engagement. And we -- and that award was granted here in the third quarter, really proud of that team. That's a very prestigious award and they look at projects all over the world for that.

And so, I think a great example of the way our teams are doing things in a right way. We are not running over the top people. We are looking for win-win solutions with all of our stakeholders and we're focusing on environmental and regulatory compliance from the start of the project and working very closely with regulators to keep them informed. So, we do things the right way. And it's while at sometimes doesn't make us start off the fastest, we tend to win the race at the end of the day, and Atlantic Sunrise is a greatest sample of that.

Atlantic Sunrise segues into an impressive list of 2019 drivers as we'll have full year of revenues from ASR. The 1.7 BCF per day Transco expansion. And this increases Transco's capacity now to 15.8 BCF per day and provides $35 million of revenue per month just on that asset proper, not including the upstream gathering revenues that will flow behind that.

As we already discussed, it also plays a role in the bottle-necking the Northeast, where we already hold the largest gas gathering position across the Marcellus and Utica shales. This increase in gathered volumes is facilitated by gathering and processing expansions that are going on as we speak. We have another Transco expansion that will soon enhance our customers' LNG export need. We are closing in on placing the Gulf Connector project in to service much earlier than originally planned. This project is to design to deliver about 400,000 dekatherms per day to Cheniere Energy's Corpus Christi liquefaction terminal and an additional 75,000 dekatherms per day of natural gas to Freeport LNG Development liquefaction project. And we are going to be able to deliver those about three months ahead of what our original plans were for that project. So, great, great effort by the teams on bringing that project in ahead of schedule.

Our Northwest Pipeline [ph] in Gulf East is expected to be placed in to service in mid-2019 and this will deliver some results in 2019 and then will be a bigger driver in 2020. That's in the Shell Appomattox field, they actually have four other fields that are dedicated to us in that area as well. We have completed our work on the Mobile Bay plant and are ready to take on that gas as soon as they complete their offshore line also well ahead of schedule. And if you recall, if you look back in our earlier notes on this project, you would have seen we were expecting that to come on in 2020. So, another project that is well ahead of schedule on.

Let's move to Slide Six and check in on a couple of key projects providing access to new Northeast supplies. When we spoke to you at Analyst Day in May, we have referenced two expected Transco expansion projects to provide access to new Northeast supplies. First of all, known as project number two at Analyst Day, project two was actually our Leidy South project. We have a 15-year commitment with Seneca Resources and Cabot for a 100% of the 580,000 dekatherms of firm transportation capacity. And this will continue to grow our strategic footprint in the Marcellus adding to the 62% growth in Transco design capacity since 2013. And adding to the already 3 billion cubic feet per day of Transco's Marcellus takeaway capacity over that same time period.

We are targeting a fourth quarter 2021 in service date that will provide attractive returns consistent with the recent Transco expansions. And then, additionally now on project 1, this project is very much alive and well. We are awaiting final Board approvals from our customers and on that project and expect an announcement in the fourth quarter of this year. So, again great work, this has been going on and that's a very strategic project that we're all very excited about. These two projects just keep adding to the stream of hits that give us confidence and use the transparency you seek for our growth for years to come.

So, with that update, let's move on to the last Slide Number Seven and wrap up, we will take your questions. On this final slide, we recap many of the key points. We've made detailing why Williams is a strong, stable, conservative and growing company. Many of these themes lead back to things we have discussed previously in the presentation. So, I won't drag you back through all that detail here again.

Rather in summary, as I said in the beginning of the presentation, I am extremely pleased with how the company is positioned right now. Natural gas demand is experiencing strong growth and the fundamentals continue to build on the backs of low-priced natural gas for demand and that's really what's going to drive our success.

We've experienced strong execution across our irreplaceable natural gas-focused asset base. We've built an earnings base that is highly predictable and not subject to commodity price volatility. We've improved our balance sheet position and we have visibility into continued improvement primarily through capital discipline and the visible earnings growth on a per share basis and earnings across all of our businesses driving that.

On the right-hand side of the slide you can see the continued very favorable comparison one finds between Williams and the median S&P 500. And as we've discussed on Slide Two, after what is going to be a terrific 2019 with 10% EBITDA growth, we have a clear line of sight to 5% to 7% EBITDA growth for many years to come. And this quarter strong execution results highlight, why we are so bullish on the future. And we look forward to coming back quarter-after-quarter showing how Williams is delivering on the opportunities created by our natural gas infrastructure focus strategy.

And with that, I thank you for your time today. And we'll turn it over for questions. Operator?

Questions and Answers:

Operator

(Operator Instructions) We'll take our first question from Shneur Gershuni of UBS.

Shneur Gershuni -- UBS -- Analyst

Good morning, guys.

Alan Armstrong -- President and Chief Executive Officer

Good morning.

Shneur Gershuni -- UBS -- Analyst

Just as a -- thanks Alan, as a question here. In your prepared remarks, you sort of talked about the Blue Racer asset going for 14 to 16-times EBITDA. You're obviously trading below that. And I'm sort of thinking about your guided dividend growth rate of 10% to 15%. Sort of given that valuation disconnect has there been any thought about altering your return of capital plans to maybe lower the dividend growth rate? And then do a share buyback to fill the gap? I'm just kind of wondering, how you're thinking about these valuation disconnect with your discussions with the Board?

Alan Armstrong -- President and Chief Executive Officer

Yeah, great question and certainly something we constantly monitor and discuss with the Board. I would say that we certainly are very focused on deleveraging. And so I would say that is front and center. But as you see being able to continue to do asset sales at these kind of multiples drives a lot of value as well and frees up capital for those kind of things. So, we certainly constantly look at those opportunities and we think there's a lot of value to be driven in the stock as we consider those various alternatives. But I wouldn't want to lose sight of our focus on that 42 metric that both the Board and the Management Team are pretty laser-focused on right now.

Shneur Gershuni -- UBS -- Analyst

So, is it fair to say that you would -- if you're offered a very attractive price that you would consider selling asset also?

Alan Armstrong -- President and Chief Executive Officer

I would say we look at things first from the strategic standpoint. And as you've seen the Four Corners asset really wasn't integrated into our asset base and we didn't see the growth in that business and didn't have the kind of operating margin ratio that we typically enjoy there. So, that's one example, where an asset is not really all that strategic to our future any longer. So, we certainly look, we look at assets like that. We also have a transaction that we're working for the purity pipes in the Houston Ship Channel area that's not that was part of a Petchem business and really not strategic to us any longer.

So, I would say it's a combination of the kind of value that we think the assets can build in terms of our overall strategy. But I think as we've proven, we're willing to pull the trigger, when we see evaluation upgrade that doesn't damage our strategy in anyway.

Shneur Gershuni -- UBS -- Analyst

Now that makes total sense. One last follow-up in operational type of question. I was wondering if you can discuss what you're seeing in the Northeast in terms of producer behavior? You had strong dry gas gathering volumes, but you also had higher NGL production, and at the same time processing volumes were down. Are we starting to see a shift from dry to wet? Just kind of wondering if you can give us some color around that, or if that's just really more driven from JV so forth?

Alan Armstrong -- President and Chief Executive Officer

Yeah. The shift I think we're going to see some dry gas volume pickup obviously with Atlantic Sunrise coming on. And I would just say the ability for producers in the Northeast PA, the wells are so large up there, it can come on so fast that. If you are looking at volumes you might see a little quicker reaction up there just because of the size of the wells and the production up there and the number of add it's already exist. But I would say that over the last nine months or so several of the producers and mainly Southwestern, probably being the largest of those has really ramped up their efforts. And we are ramping up our efforts putting a lot of infrastructure in the Ohio Valley Midstream area. And so, we are going to start seeing some pretty impressive volume ramp-up in that area as our infrastructure starts to come on there. So, I think really we're going to see a pretty balanced approach to both the wet gas and the dry gas. Again, it doesn't really sneak upon us because we've got to the build infrastructure out to allow that gas to flow. And we're well on our way to getting that infrastructure build out right now.

Shneur Gershuni -- UBS -- Analyst

Perfect. Thank you very much. I appreciate the color today.

Alan Armstrong -- President and Chief Executive Officer

Thanks.

Operator

Thank you. We'll take our next question from Danilo Juvane of BMO Capital.

Danilo Juvane -- BMO Capital -- Analyst

Thanks everyone and good morning. Alan now that the Atlantic Sunrise is online, how transformation do you -- did you see this being for the Northeast G&P segment? You outlined in your prepared remarks that you expect EBITDA growth in the segment to actually be higher than the 15% in volume CAGR you outlined. So, I'm trying to understand how big this could be fir Williams going forward?

Alan Armstrong -- President and Chief Executive Officer

Yes, Danil, thank you. We've been investing in the Northeast for a long time kind of waiting on things to finally get debottleneck. I don't think anybody has doubted the resource. But one thing I might point out because we've seen a variety of different producer reports come out here in this quarter in this earnings season. And I would just point out to folks that much of the production behind our system has been held up for various reasons in terms of the production growth in those area.

Cabot obviously and our Bradford County and our Susquehanna County area has literally had no way out of there, the price that made any sense. That is opened up. Even gas in the Southwestern PA area and the West Virginia area, even though it had takeaway capacity, the pricing has not been all attractive till here more recently. But one thing, I think, people really miss, is the amount of acreage that is set behind our systems that has not been drilled on. And so if you look at the density of drilling on our dedicated acreage versus a lot of our peers, you would see that our density of drilling is much lower than our peers, partially because there was a number of high-priced contracts that have been resettled. There was the Chesapeake contract that Southwestern picked up and then we reformatted for them in a way that allowed them to get after the drilling in that area.

And then even in the Utica, if you think about the Utica, Chesapeake was under-capitalized to produce the Utica. Now we have Encino with the right capitalization to bring that up. So, really across all these areas, we've kind of been sitting right up against those points of resistance. And we're now seeing those various points of resistance cleared and so that's really what is driving a lot of this -- that rapid growth, here as we look for the next three years.

Danilo Juvane -- BMO Capital -- Analyst

Thanks for that. And within that CAGR that you outlined for the volumes, how much CapEx are you assuming annually?

Alan Armstrong -- President and Chief Executive Officer

I don't know that we've put that actual number out there. I think if you go back to look at the Analyst Day package there, Michael.

Micheal Dunn -- Chief Operating Officer

Yeah. At Analyst Day we talked about, about $500 million a year for northeastern investments and that's ramped up a little bit with the projects that we approved earlier this year at out grow. But we see that as a pretty good average there in the northeast.

And I'll just add a little bit Alan's previous answering the Northeast growth, we're seeing a lot of our producer customers that are capturing market, they never have to hit the interstate stay pipeline. There's a lot of large power plants, gas-fired power plants that are being built right on our gathering system. So, we moved those volumes in our gathering systems from the wellhead to these power plants for our producer customers and they don't even have to leave the basin. So, there's a lot of growth there that you see from our customers that they are capturing this business.

Danilo Juvane -- BMO Capital -- Analyst

Thanks, Michael. Last question from me. Alan you stated in your prepared remarks, focus on the capital discipline. As you evaluate growth going forward, have you thought it evolved on Bluebonnet Market Express?

Alan Armstrong -- President and Chief Executive Officer

Yes, I would say that we certainly see another project need to be built there. We see a lot of interest. Chad Zamarin and our team there have done a great job of looking to see what kind of joint ventures are possible out there for us. And so, I would say stay-tuned on that. We're certainly going to remain, have a lot of remaining capital discipline. But we've got a pretty creative team and they're doing a great job there of matching up our capital discipline with opportunities in the basin. And so I'm encouraged by their activities and the kind of feedback that they're getting right now.

Danilo Juvane -- BMO Capital -- Analyst

Those are my questions. Thank you.

Alan Armstrong -- President and Chief Executive Officer

Thanks Danilo.

Operator

Thank you. We'll take our next question from Jeremy Tonet with JPMorgan.

Jeremy Tonet -- JP Morgan -- Analyst

Good morning. Just want to build on the topics of portfolio management and leverage here. And it seems like in the marketplace there's very -- there's a strong preference still for getting leverage lower. And I know you have the 4Q long-term target there. But just wondering what are your thoughts were as far as possibly accelerating the kind of approach to that target?

Given as you said Blue Racer touched a very strong price tag. It listed up kind of assets were non-core specially things that came along with accessing the past. Especially because you guys have such a great suite of growth projects in front of you, there's so much capital to be deployed there. Just wondering your thoughts on maybe being looking to sell some more assets here and really kind of grab the bull by the horns and move that leverage down?

Alan Armstrong -- President and Chief Executive Officer

I would just say, as I said earlier, we are constantly looking at that and then the opportunity is not lost on us. So, but again we really don't want to damage our future in the process. I would say that continuing to work with the private infrastructure fund money that's willing to pay and evidently has a much lower cost of capital than the public space does right now.

We see ways to work with them that provide us growth potential in the future upon exit opportunities for them. So, we think that's pretty attractive vehicle for us. And so we think we can continue to build our backlog of portfolios through looking at that. But I would just tell you, as I mentioned earlier, we want to make sure, we don't damage our long-term strategy on the one hand and on the other hand, we take advantage of this. But I would say, we are dead serious and very anxious to get down to that debt lever metric that we see out there. So, I would say we're working pretty hard toward that.

Jeremy Tonet -- JP Morgan -- Analyst

That's helpful. Thanks. And just want to turn to as a guide here for a minute. And you said you're heading toward the top end of the '18, but even if you do hit the top end it seems like it would be kind of Q4 flat versus 3Q. And granted you have the Four Corners sale, but you also have Sunrise, G&P upstream that Sunrise really providing some nice operating leverage there. So, wondering what line of sight do you have to that? Exactly how that bump is materializing? And is the 4Q guide just being kind of conservative here? Or any other headwinds we should think of?

Alan Armstrong -- President and Chief Executive Officer

No. I don't think there is any particular headwinds. Just a couple of things that you should consider in that math. First of all, I would say, we are making a lot of room for much lower NGL margins and certainly we've seen NGL margin. And so that's not a big number for us, but within that margin, where you guys are talking about here than it is something to consider. And I'd just say we're trying to make share we've got plenty of room and you could argue we're being conservative, but we've seen these things swing hard before.

And then secondly, I would say as well, we have operating cost in across our systems and if you think about our asset integrity program, where we go out and smart pick our pipelines and we are constantly in the process of doing that. We want to make sure we release plenty of money in our operating budgets to repair things, when we find that. To say is another way, we really don't know until we run those tests and dig systems up, we really don't know what we're going to get into in terms of repair costs. So, we're trying to make sure we leave plenty of allowance in there for that. I would also tell you that's, that is pretty conservative in terms of how we have that built into the plan right now.

And then finally you've got to take out Four Corners sale out there as well. And remember as you're calculating kind of that increase on ASR that we have the AFUDC that would have been in the third quarter as well. So, that goes to earnings on Atlantic Sunrise. So, those are some finer points that we get there I'd say in summary, I think it's fair to say that we feel very confident in being able to come in at least at the high-end of the guidance range.

Jeremy Tonet -- JP Morgan -- Analyst

That's helpful. Thanks. And just finally, when you talk about the '19 EBITDA guide again 10% higher, is that relative to the mid-point of 2018? Or, if you hit the high-end, would it be of the high-end, or how do you think about that?

John Chandler -- Senior Vice President, Chief Financial Officer

Yes, it would be up to midpoint. I mean, we haven't changed our guidance for 2019. The midpoint there was $5 billion.

Jeremy Tonet -- JP Morgan -- Analyst

Got it. That's it from me. Thanks for taking the question.

Operator

Thank you. We'll take our next question from Dennis Coleman of Merrill Lynch.

Dennis Coleman -- Merrill Lynch -- Analyst

Yes, good morning. Thanks for taking my questions. I'd like to just hit on the leverage for a couple of more questions here. The 4.2 number that you're talking about this morning, how did you come to that number? I mean, we see a lot of targets out there it oftentimes it's 4.0 or 4. 5, how did you come to such a precise number of 4.2?

John Chandler -- Senior Vice President, Chief Financial Officer

Yeah, this is John Chandler. Obviously in preparing for the WPZ roll-up, we spent a lot of time talking to rating agencies. And we have a desire to be solid BBB BAA two rated company. It's solidly in that category. It became pretty clear to us during that those discussions, but that on their calculation using their the way they do their calculation that was around 4.5-times. There is about two to three-tenths difference between our book, debt-to-EBITDA ratio and how they calculate 4.5-times, that's where 4.2 came from. So, at a 4.2 level in my mind and of course it's always subject to validation again with rating agency that puts us squarely in a BBB BAA solid category.

Dennis Coleman -- Merrill Lynch -- Analyst

Perfect. Make sense. And so you talked about a long-term target, any guidance or any thoughts you might have as to how quickly you can get there?

John Chandler -- Senior Vice President, Chief Financial Officer

Well, you know In 2019, we guided to inside 4.75-times And we obviously in 2020, we'll continue to see EBITDA growth that will help bring that down further. And as Alan pointed out, we continue to look at the opportunities for asset sales. And it ultimately to bring that down further, we require some additional asset sales. I don't want to give you an exact time, when we're going to get there, but I can tell you we're very focused on moving toward that as quickly as you can.

Dennis Coleman -- Merrill Lynch -- Analyst

Okay. That's great. It was just worth asking. On the DJ if you could, you talked about on your slide two having all the wells permitted out through 2020 and mostly through 2021. Can you give us any more specifics on what the forecast are? How many wells you're thinking of? What that forecast entail?

Micheal Dunn -- Chief Operating Officer

Good morning. This is Micheal Dunn. Right now we've got about $16 million processing capacity installed and we're working to get another $200 million in by the end of the year first part of 2019. So, you can look at that ramp. And then we actually have construction of another $200 million a day at our Kingsford facility up there that's under construction as well.

So, we expect that online in mid-2019. So, once that is online, we would have about 460 million a day of processing capacity there in our new Rocky Mountain Midstream asset. And we do expect obviously the first 200 million is going online late this year, or in January to be full very quickly, obviously and that's why we have the Kingsford facility under construction for mid-2019 in service day.

Dennis Coleman -- Merrill Lynch -- Analyst

Okay.

Alan Armstrong -- President and Chief Executive Officer

And that just in terms of number of wells, in terms of total number of wells on that, our math shows us that we've got a little over 800 wells that are already approved in '19 and '20 and '21, right.

Dennis Coleman -- Merrill Lynch -- Analyst

Okay, that's great. And so, you would go forward with all of that what Mike just talked about regardless of the outcome next Tuesday?

Alan Armstrong -- President and Chief Executive Officer

Yes. As long as we're certainly going to pay attention to the way that gets treated. But I would just say right now as we're moving ahead there is plenty of gas that is waiting on this infrastructure. So, the near-term construction is a certain must and our producers are desperate to see that get installed. Obviously, we'll keep our eyes before we spend commit any further capital. I would see what other changes might occur out there, but right now they're is plenty of volume, plenty of demand for the service to continue with our expansions.

Micheal Dunn -- Chief Operating Officer

That's great. Thanks Alan. That's all I have.

Alan Armstrong -- President and Chief Executive Officer

Thank you.

Operator

Thank you. We'll take our next question from T. J. Schultz of RBC.

T. J. Schultz -- RBC -- Analyst

Great, thanks. Good morning. Just first given the private capital available and your comments on its ability to invest that certain multiples. You partnered in the DJ, are there other opportunities to partner with private capital that maybe available to leverage your system as a whole?

Alan Armstrong -- President and Chief Executive Officer

Absolutely. I think the good news is, we are seeing as a very reliable operator in the space and we have tremendous footprints already. And so I will just tell you that the Northeast area is an area that provides a lot of consolidation opportunity and ability to reduce capital investment in the area. The consolidation is always occur in these basins and we think that we provide a great investment opportunity for these infrastructure funds to invest alongside us. And so I would tell you that Chad and his team are extremely engaged with a lot of those sources of funds right now and have a lot of arms in the fire right now looking for those opportunities.

T. J. Schultz -- RBC -- Analyst

Okay, good. If I just moved to the Gulf of Mexico, my sense is some of the potential growth comes at somewhat lower CapEx needs. Can you just frame that a little what maybe it's a near-term opportunity to get some of the operational leverage embedded into the system? And where would you see more meaningful investment options to kind of further that maybe around Mexico deepwater realizing that still that longer dated?

Micheal Dunn -- Chief Operating Officer

Yeah, this is Michael, I'll take that. We do have a lot of tied back opportunities there that we're working on as you indicated that are low or no capital just because of the infrastructure that we've already put in place there. We're actively working a number of those opportunities and are leading those into our future guidance, as we speak. So, we are very optimistic about the Gulf of Mexico right now. Our Discovery System has several opportunities along here as well, but you also mentioned the deepwater in Mexico of our Perdido system, where we are the only entity out there. And we really do expect some opportunities come our way there in the future as well. So, a lot of great projects in the pipeline so to speak there and we are going to take advantage of the infrastructure that we built there with very high return projects with not a lot of capital to deploy there.

Alan Armstrong -- President and Chief Executive Officer

And just to kind of name some of those just to remind you we've mentioned in the past, we've mentioned the Chevron-Ballymore prospect in the eastern Gulf, the Shell well prospect in the west and then there is also several Chevron prospects that we are working with them on in the central Gulf right now, as Michael mentioned around our Discovery System. So, the list actually is pretty long and some of them are more certain than others. Certainly these very large finds like Ballymore and well, while they're further out into the future there very significant in terms of revenue and EBITDA growth for us with very little capital required.

T. J. Schultz -- RBC -- Analyst

Okay, makes sense. Just last one, thinking longer term with the liquids that you will control out of Rockies midstream, does that provide or present opportunity for more downstream investment? And how are you thinking about the ability to secure access to the coast for those barrels longer term?

Micheal Dunn -- Chief Operating Officer

Yeah, I'm going to dodge that question. I'll just tell you that here. We are working a number of different opportunities. We are really excited about how we're going to position ourselves for the future on that. But we are in quite a few discussions right now and it doesn't makes sense for us to lay that out at this point.

T. J. Schultz -- RBC -- Analyst

Okay. Fair enough. Thanks.

Alan Armstrong -- President and Chief Executive Officer

Thanks.

Operator

Thank you. We'll take our next question from Michael Lapides of Goldman Sachs.

Michael Lapides -- Goldman Sachs -- Analyst

Yeah. Hey guys. Two questions. One just on the Northeast G&P kind of that CAGR you put out. How are you think about the cadence of that? Meaning, very front-end loaded 2019 and then kind of trailing off? Or, you're all kind of looking at that little more evenly spread out?

Micheal Dunn -- Chief Operating Officer

Michael, this is Michael. I would say, it's obviously expansions come on chunky if you will and we've got an expansion under way right now in Northeast Pennsylvania that we're working on. That will increase our capacity on the system there by 800 million a day. That will be coming on in tranches in 2019, as we had compression in pipeline looping. And that would put us our capacity of almost 4 Bcf a day on that system alone in Northeast Pennsylvania and the Susquehanna supply.

So, I'll tell you, it will come on in chunks, as we obviously expand the capabilities there, but we've got an exciting one under way right now. We're talking to our producer customers up there right now about the next expansion that will come behind at 800 million a day, specifically in northeast Pennsylvania.

The other growth that we're seeing in the Appalachian area in Southwest Pennsylvania, West Virginia and Ohio, we are seeing the producer customers there ramping up their activities. If you saw the transcript from the southwestern discussions, they are once they have their Fayetteville Shale sale executed they fully intend to ramp-up activities there as their call indicated.

And that projection is coming right to our Oak Grove processing facility. And we're building a lot of compression up there for them right now as well as processing capability for them. And our other customers in the area. So, it will be coming on in both of those different areas in tranches, but we have a lot of activity under way right now with our teams there getting ready for that capacity.

Michael Lapides -- Goldman Sachs -- Analyst

Got it. Thank you, Michael, much appreciated.

Operator

Thank you. We'll take our next question from Craig Shere of Tuohy Brothers.

Craig Shere -- Tuohy Brothers -- Analyst

Good morning. As far as the average $500 million a year multi-year figure for Northeast G&P, it's roughly hit the levels that discussed at the May 2017 Analyst Day. Since you've already announced projects that kind of place 2018-2019 above that trend. Can we presume that the capital spend necessary in 2020 and 2021 would be significantly lower to fill shoulder that assuming roughly 11 Bcf a day in 2021?

Micheal Dunn -- Chief Operating Officer

Yeah. I think for the trajectory of growth that we're discussing right now I think that is a fair assessment. I would add though, I think, the big opportunity, where incremental opportunity for us that would reduce capital even further would be consolidation of some of the joint ventures in the southwestern part of play, so between the Utica system, Blue Racer, OVM and some of the other adjacent assets in the area. There's some pretty big consolidation opportunities out there that would reduce the need for more capacity to be built. So, we're hopeful that we're able to execute on some of that consolidation and more rapidly reduce the capital investment in the area.

Craig Shere -- Tuohy Brothers -- Analyst

Excellent. And speaking of the growth, the 15% CAGR seems to imply over three years about 11 Bcf [ph] these, but then also it looks like in the third quarter your adjusted EBITDA was about almost $0.42 nm [ph] versus less than $0.39 for the first half of 2017. And you're kind of guiding toward that to grow even further given the combination of Oak Grove Processing, increasing west gas volumes, higher overall system utilization. Is it reasonable to think that by 2021 we could be at $0.50 plus nm applying growth segment EBITDA of over $2 billion on 11 bs a [ph] day?

Alan Armstrong -- President and Chief Executive Officer

Yeah, that's a lot of math you went through there Craig. But I would just say, as we continue to look at the marker that we set out there at Analyst Day that we feel very comfortable with that, that we're on a trajectory right now that makes us feel very comfortable about that. And so I would say that, that was kind of set out there aspirationally that what if the Wood Mac growth level occurred.

And I'd just say that we're -- will be moving path that down to more detailed base focused in our system starting this quarter rather than an analyst broad picture of the basin. So, I would say we're moving off of being relying on somebody else's forecast and becoming more reliant on our own visibility to producers action there. So, the answer is, yes we're certainly moving to that.

And again I would just remind you that because we had some areas that have been retarded from growth due to lack of -- very severe lack of infrastructure out of the areas. We are in some of the higher growth areas and so that's driving and maybe even a little better than what we had laid out there earlier.

Craig Shere -- Tuohy Brothers -- Analyst

Well, to simplify it, if at least in the third quarter my math is correct, you are approaching $0.42 nm [ph] in terms of adjusted EBITDA. Is it reasonable to think, is it unreasonable to think that you could get to $0.50 plus by 2021?

Alan Armstrong -- President and Chief Executive Officer

It is that is very reasonable to think that we can get there by 2020. Again it's going to be very dependent on mix between, where the volume show up and that will move around a little bit. But one thing that's really come our way in a very positive manner is the Utica rich, which had been on a decline and that is very high margin basin for us and that has been on decline. And that is at least -- at least stop declining now and has the potential for growth. And so that was working against us previously, but is starting to turn the other way for us.

Craig Shere -- Tuohy Brothers -- Analyst

And last question, when you say 10% in to '19 and 5% to 7% long-term. The 5% to 7% is that off the '19 level, or an aggregate over several years?

Alan Armstrong -- President and Chief Executive Officer

That is yes. Yes, that's just off of '19 looking forward. And I would just remind you though that, that is based on just our existing contract business. And so I would say there is potential for improvement as we continue to grow new pieces of business that are not included in that forecast yeah.

Craig Shere -- Tuohy Brothers -- Analyst

Understood. I appreciate the call. Congrats on the quarter.

Alan Armstrong -- President and Chief Executive Officer

Thank you.

Operator

Thank you. We'll take our next question from Christ Sighinolfi of Jefferies.

Chris Sighinolfi -- Jefferies -- Analyst

Hi Alan.

Alan Armstrong -- President and Chief Executive Officer

Good morning.

Chris Sighinolfi -- Jefferies -- Analyst

Thanks very much guys, [ph] details this morning. Two questions from me, if I could. First, in looking through the 10-Q you filed this morning, it seems like you've had roughly a $430 million working capital headwinds over the last four quarters, which is significantly more than I can find anytime in the last 10 years. So, I'm curious, what's driving that? And then if we might expect it to reverse in the future quarters?

John Chandler -- Senior Vice President, Chief Financial Officer

I'm not aware off hand of with really that some unique working capital drive. I had to guess we've had a significant amount of capital spend. And so you probably have a build in payable at the end of the quarter as for projects that are under way that we know we've invested, but haven't you had an output yet. We've got to look into that and give you more details, but I suspect that's probably something new capital spend.

Chris Sighinolfi -- Jefferies -- Analyst

Okay. But if that, is that, if your hunch is correct, we should see them some reversal in the future?

John Chandler -- Senior Vice President, Chief Financial Officer

Yes.

Chris Sighinolfi -- Jefferies -- Analyst

Okay. And then second, this is just the curiosity question that the analyst package last night have listed $35 million in converts stock contribution to the Williams foundation. I haven't seen you guys doing that before, although Oneok made a similar contribution to its own foundation last year. So I was just wondering what the terms of that versus that far realizing its very small? And then what are your plans are, if any for additional future contributions to the foundation?

John Chandler -- Senior Vice President, Chief Financial Officer

Yes, the preferred stock had a 7.25% coupon on it. We have no plans to add anything to that. That was part of just planning and structure around the roll-out just like Oneok would've had in their situation. So, that will be outstanding. And we make a contribution to our foundation anyway. And so whether we are making it in a natural cash contribution, or doing it through a dividend, the outcome is really the same to Williams. So, we will just increase it. We'll be paying a dividend in lieu of some cash contribution, so historically have made to the foundation.

Chris Sighinolfi -- Jefferies -- Analyst

Okay. So, this is not consistent historical treatment, but just more of a streamline approach?

Alan Armstrong -- President and Chief Executive Officer

And it accomplishes the structural need that we needed in to roll-out, but again much as Oneok did and we saw the like from the transaction and so pretty complicated question. But I would just say in practical terms, so it is very much that activity, was very much driven by that structure and the roll-out. But I would say that practically and more pragmatic terms, as John mentioned, we've had that expense out there this covers that for quite some time for us it's actually a positive against what you would've seen in previous cash flows.

But I also would tell you that we -- the foundation is very strategic to the company. When we go into new communities, we like to show that we're a good neighbor in the communities as we operate as Williams. And the way foundation help support us being a good corporate citizen in those communities. And so it is a very strategic investment for the company to make those investments in the foundation.

Chris Sighinolfi -- Jefferies -- Analyst

All right. Thanks a lot for the time, guys. Appreciate it.

Operator

Thank you. We'll take our next question from Colton Bean with Tudor Pickering Holt & Company.

Colton Bean -- Tudor Pickering Holt & Company -- Analyst

Good morning. Alan and Michael, just circling back briefly to the comments on margin expansion in the northeast. You kind of noted the overall uplift there at the EBITDA level. But specifically thinking about costs, it seems like unit cost it held pretty steady here through a kind of year-to-date 2018. As you look at the volume ramp and you've dialed in kind of your expectations through the budgeting process for 2019. How should we think about the progression of OpEx over the course of 2019, just relative to what we said here it would be great?

John Chandler -- Senior Vice President, Chief Financial Officer

Yeah, good morning. Thanks for the question. We obviously have higher costs as we had compression and we led operators to go in and operate the equipment there. But I have to remind you, as I do every quarter in regard to the electricity costs, a lot of our compression that we're adding is electric compression due to the regulatory constraints on the air shed there. And so that shows an increase in our operating cost, but the majority of not all of that is reimbursable from our customers. And so, you won't show that netted out from that reimbursement against our operating cost, in our operating cost line is actually comes to us in other income. So, you will see an increase and it look disproportionate to our actual costs that we have experienced in the past. And it's all driven by higher electricity costs that are reimbursed elsewhere.

Colton Bean -- Tudor Pickering Holt & Company -- Analyst

Got it. So, overall expectation is declining you in costs, just now reflect on a line item specific basis?

John Chandler -- Senior Vice President, Chief Financial Officer

That's right. We continue to see our EBITDA per Mcf going in the right direction and our cost per Mcf moved, going in the right direction as well.

Colton Bean -- Tudor Pickering Holt & Company -- Analyst

And just on the west there, so slight down tick in volumes. Can you just provide a bit more detail on the moving parts there at the basin level? And then just quick follow on. So, you mentioned DJ outlook being inflated by permits. Any thoughts on the impact on the Piceance?

Alan Armstrong -- President and Chief Executive Officer

A lot of the Piceance is one is not very heavily populated, if you've ever been out there. But two, a lot of that is on federal land as well and of course this that 112 doesn't affect federal land. So, and a lot of producers actually own the loan that they operate on out there. So, very different picture for the Piceance and don't expect much impact there. And so I would just say that, that's really the only exposure. The other area down around Durango and so forth of course that was the Four Corners Area assets. We've operated in that area for a lot of years, but that now is sold. So, we don't have exposure anymore other than the Piceance and the DJ Basin.

Micheal Dunn -- Chief Operating Officer

Oh sorry you had asked about the question I'm sorry talking about that. Yeah, don't have a whole lot of color to add to you on the -- for you on that. We constantly have some up and downs. The Haynesville growth that have been driving a lot of the growth there in the western volumes. And we see -- as we forecasted last year, we expected that to level off a little bit in terms of that ramping growth.

We are seeing a lot of new opportunities with new customers in the basin and really excited about that. So, we may see the growth in Haynesville come back more from customers outside of the Chesapeake acreage there an area Chesapeake continues to be successful. But not seeing the kind of growth we saw from them last year. So, that's probably the biggest moving part. If you look at '17 to '18 in terms of what the growth drivers have been behind the basin, I would say, both Wamsutter and the Jackalope System are the two areas that we're going to see some growth here as we look forward to the next 6 to 12 months.

Colton Bean -- Tudor Pickering Holt & Company -- Analyst

Got it. Appreciate the time.

Alan Armstrong -- President and Chief Executive Officer

Thank you.

Operator

Thank you. We'll take our next question from Becca Followill with US Capital Advisors.

Becca Followill -- US Capital Advisors -- Analyst

Hi, guys. Thanks for taking my question. On the DJ Basin, I understand your comments on where you think you've got wells permitted and docks et cetera. But, let's say, hypothetically that this does pass, how much of your 5% to 7% of EBITDA growth is attributable to DJ Basin growth?

Alan Armstrong -- President and Chief Executive Officer

Bec that gets really sensitive. In that outer period. It's really not factored into that so much at all right now. So, it will start to add up in 2020 and '21. It will start to be meaningful. But as we look forward to that right now it's really not a very big factor in overall 5% to 7% growth. So, we're hoping that it will be, but just given the limited size of the investment there, it's not that meaningful against the number right now.

Becca Followill -- US Capital Advisors -- Analyst

And just wanted to dig a little bit deeper on your thought process on making investments, assuming that this does not pass. But there's still I think of you that this is still going to be an issue in Colorado it may come up if either legislated or two years from now. So, how does that play into you making decisions for long-term capital investments on plants besides these first two plants?

Alan Armstrong -- President and Chief Executive Officer

Again, I think we're going to see responsible development. I think Williams is very good at being responsible. I think the industry is going to shape as it needs to, to merge with Buckley [ph]. And by the way, if somebody thinks this is going to be limited to Colorado, I would tell you that this move came from outside of Colorado. And I'm not sure that the move against development in areas is going to be limited to just Colorado.

And I think producers and midstream infrastructure providers are in a different world today than we were five years ago and we're going to have to learn to deal with the various stakeholders. I think Williams is extremely good at that and because of our school of hard knocks that we've had in the Northeast, I think we are very good with that. And so I would say, I think, these kind of areas present an opportunity for us because we found ways to appease the concerns and the needs and to be able to grow infrastructure in a responsible manner in the area.

So, yes, it's an area that I think will slow growth down, but if you think about that from a midstream infrastructure provider standpoint, this is a something has lost on people a lot of times because people are focused on the short-term to often. But to the degree that you have acreage dedicated to you, if that acreage all got drilled at once, the efficiency of your infrastructure would be very low, because you would have to build all your capital at once, all the cash flows it come through in one spike, and you wouldn't have the longevity of the cash flows and you would have to build for bigger peak. And so I would just tell you that great development that is more sustained is actually a positive for return long-term returns on midstream infrastructure and I think that's missed on people pretty often, as they think about this issue.

Becca Followill -- US Capital Advisors -- Analyst

Thank you. And then the next question is, just want to clarify that in your guidance there is zero uplift from Transco rate case?

Alan Armstrong -- President and Chief Executive Officer

That's correct.

Becca Followill -- US Capital Advisors -- Analyst

Okay. Perfect. Thank you.

Alan Armstrong -- President and Chief Executive Officer

Thank you.

Operator

Thank you. We'll take our next question from Christine Cho with Barclays.

Christine Cho -- Barclays -- Analyst

Hi, everyone. I just have one question on the Northeast. The 15% CAGR could you give us a general idea of the breakdown of that growth between Northeast PA and Southwestern PA/West Virginia. Just trying to get a sense of like, if one is higher growth than the other?

Alan Armstrong -- President and Chief Executive Officer

Yeah, Christine, let me see give you a little bit of color here. Probably on a percentage basis, the two highest areas are the Ohio River Supply Hub area, particularly on a margin basis. And then Susquehanna Supply Hub is probably right behind that and toward the bottom of that would be the Bradford Supply Hub and then last would be the, in terms of what we have assumed in here right now would be Utica Supply Hub. But I would tell you there is a remarkable small amount of difference if you look at the CAGR to one of those, it's actually pretty balanced in our current forecast.

Christine Cho -- Barclays -- Analyst

Okay, That's helpful. And then I just wanted to touch on the equity method investments in the Northeast. Quarter-over-quarter, we saw a bit of a jump from 2Q. We're just wondering if you could just talk about, which JV is specifically drove that? And how we should think about that going forward?

Alan Armstrong -- President and Chief Executive Officer

Yeah, I'm looking at, if Michael or John have.

John Chandler -- Senior Vice President, Chief Financial Officer

I think that's probably in the Bradford.

Micheal Dunn -- Chief Operating Officer

I would say that's where we saw the biggest volume growth was in Bradford JV.

John Chandler -- Senior Vice President, Chief Financial Officer

That's correct here Bradford.

Alan Armstrong -- President and Chief Executive Officer

Bradford and Marcellus shale. Both are strong. And Marcellus South is part of our Ohio River Supply Hub and so it's sits on the Eastern flank of our Ohio River system and feeds processing volume into Ohio River.

Christine Cho -- Barclays -- Analyst

Got it.

Micheal Dunn -- Chief Operating Officer

In Bradford we got about 9% increase in volume quarter-over-quarter. In Bradford we had about 9% increase in volume quarter-over-quarter.

Christine Cho -- Barclays -- Analyst

Okay, perfect. Thank you.

Alan Armstrong -- President and Chief Executive Officer

Thanks.

Operator

Thank you. We'll take our next question from Jean Ann Salisbury of Bernstein.

Jean Ann Salisbury -- Bernstein -- Analyst

Good morning. Just two quick ones from me. First have you noted interest from different classes of generalist investors since the buy-in of WPZ or nothing really changed that much?

John Chandler -- Senior Vice President, Chief Financial Officer

Nothing's changed as much as we speak, or how we can possibly perform a little bit stronger than it has been. But I can tell you we are extremely focused on talking to new investors. We spent some time in Europe. We'll spend some time in Asia here very soon. We spent some time in Canada and with so focused of identifying new investors and tracking new people to our name. We think we've got a powerful story to tell, with their stability, our strong yield and the growth that we've got in our business. So, we just got to get that out in the marketplace, but our goal is to accomplish that within the next year for sure.

Jean Ann Salisbury -- Bernstein -- Analyst

That makes sense. And then could you give a little more color on the mood of the Permian E&Ps and signing up for gas takeaway? Do you feel like most believe that they'll be able to flourish if they need to, so the kind of puts less pressure on signing up at all. Or is it more that they probably will sign up, but perhaps some with competitors other than simply bond and just gotten very competitive out there?

Alan Armstrong -- President and Chief Executive Officer

John, you want to take that?

John Chandler -- Senior Vice President, Chief Financial Officer

I'd say I think there been two projects that have been sanctioned so for that's 4 Bcf a day of takeaway capacity. So, that does, I think, provide similar lead to basin in the near-term. But I will also say that those projects had a variety of different investors and I would also say risk-adjusted returns that wouldn't really look attractive to us, when we look at our opportunities for investment. So, I think that we're going to continue to watch the basin. There is additional need for takeaway over time, but we're also want to make sure that we don't participate in any over-build coming out of the basin. And so we are going to continue to be thoughtful and disciplined. We are certainly out there talking to every producer.

We are looking at every opportunity, but we will -- if you do something with respect to a project from the Permian to our Gulf Coast assets, you want to make share it's a smart investment. I would say though that even if you don't in the near-term participate and building a pipe from the Permian to our Gulf Coast assets. And we are seeing a lot of interest in those volumes wanting to get to the Transco system and deliver into markets along our footprint.

So, we will participate in moving Permian gas through to Transco markets one way or another. And like I said we will continue to look for opportunities to build that larger infrastructure, but right now those projects just aren't as attractive as I think they need to be to make it to the top of our list.

Jean Ann Salisbury -- Bernstein -- Analyst

That make sense. That's all from me. Than you.

Operator

Thank you. That concludes our questions for today. Now I'll turn it back to Mr. Armstrong for closing remarks.

Alan Armstrong -- President and Chief Executive Officer

Okay great. Well, thank you. Thank you for the great questions and we continue to be really excited about the way the third quarter turned out and important obviously as you heard today, the capitalist that we think that sets up in the nice platform for growth that we've got to establish going forward. So, very stable cash flows, very predictable as we continue to make our numbers. And we look forward to reporting more good news to you next quarter. Thank you.

Operator

Thank you, ladies and gentlemen. This concludes today's conference. You may now disconnect.

Duration: 80 minutes

Call participants:

John Porter -- Head-Investor Relations

Alan Armstrong -- President and Chief Executive Officer

Shneur Gershuni -- UBS -- Analyst

Danilo Juvane -- BMO Capital -- Analyst

Micheal Dunn -- Chief Operating Officer

Jeremy Tonet -- JP Morgan -- Analyst

John Chandler -- Senior Vice President, Chief Financial Officer

Dennis Coleman -- Merrill Lynch -- Analyst

T. J. Schultz -- RBC -- Analyst

Michael Lapides -- Goldman Sachs -- Analyst

Craig Shere -- Tuohy Brothers -- Analyst

Chris Sighinolfi -- Jefferies -- Analyst

Colton Bean -- Tudor Pickering Holt & Company -- Analyst

Becca Followill -- US Capital Advisors -- Analyst

Christine Cho -- Barclays -- Analyst

Jean Ann Salisbury -- Bernstein -- Analyst

More WMB analysis

Transcript powered by AlphaStreet

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Personal Finance , Stocks
Referenced Symbols: WMB



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