Williams

In the oil and gas industry, in both the upstream (drillers) and midstream (pipelines) sectors, companies often split themselves into several different companies on paper. It all has to do with taxes and getting as much money as possible to investors. High finance stuff. The trend lately, however, seems to be going in the reverse direction. Instead of creating subsidiaries on paper, midstream companies are recombining into one larger whole. It happened last November when the stockholders (or unit holders) for four Kinder Morgan companies voted to combine into one mothership company (see Shareholders Approve Kinder Morgan Plan to Merge 4 into 1). A couple of things were notable about that recombination: One thing is that Kinder Morgan is the largest midstream company in the U.S. The second thing is that its founder, Richard Kinder, is the man who pioneered the use of MLPs or Master Limited Partnerships as a way of bumping up profits for shareholders. He reversed himself and knit it all back together, on paper. What is perhaps the country’s second largest midstream company, Williams, is now doing the same thing. Yesterday Williams announced that it is buying out its subsidiary Williams Partners LP in a stock deal valued at $13.8 billion. That is, Williams is buying itself–or rather a piece of itself–and streamlining the corporate structure of the company…
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The midstream behemoth Williams issued an update for first quarter 2015 yesterday. Williams, like other large companies, is split into pieces. There is the mother ship Williams (stock ticker symbol WMB) and Williams Partners (stock ticker symbol WPZ). Since Williams Partners is the active company in the northeast, we’ll limit our focus to the report from that part of the company. Williams merged with (bought out) Access Midstream. Although that process was completed during 1Q15, the numbers reported for Williams Partners are “pre-merger” numbers, excluding the Access Midstream numbers. We expect that will change in 2Q15 when the two will have been joined throughout the entire quarter. The financials show that like drillers, Williams experienced an increase in revenue in 1Q15 compared with a year ago, but a decrease in profit, or net income. Revenue in 1Q15 was $917 million, up 19%. But net income in 1Q15 was $89 million, down a whopping 75%. Here’s the update from Williams Partners, with plenty of references to Access Midstream too…
Read More “Williams 1Q15: Revenue Up 19%, Net Income Down Big 75%”