The Williams Companies - $WMB.US

What’s The Williams Companies Business Model?

The Williams Companies, Inc. is an energy infrastructure company focused on connecting North America’s hydrocarbon resource plays to growing markets for natural gas, natural gas liquids (NGLs), and olefins. The Company owns and operates midstream gathering and processing assets, and interstate natural gas pipelines.

What The Williams Companies is doing in more details?

The Williams Companies are naturals for moving gas around the US. Williams gathers, stores, and processes natural gas and natural gas liquids (NGLs). It also operates stabilization capacity, fractionation facility, storage capacity, and other ancillary assets, including loading and terminals.

The company’s interstate gas pipeline and gathering & processing operations span the US, including assets in the Transmission & Gulf of Mexico, Northeast G&P, and West.

The Williams Companies agreed to be bought by Energy Transfer Equity (ETE) but the deal fell through in 2016 when ETE backed out, citing the weak energy market.

Where The Williams Companies is Operating?

The company operate its business through three reportable segment: Transmission & Gulf of Mexico, Northeast G&P, and West.

Transmission & Gulf of Mexico is comprised of interstate natural gas pipelines, Transco and Northwest Pipeline, as well as natural gas gathering, processing, and treating assets and crude oil production handling and transportation assets in the Gulf Coast region.

Northeast G&P is comprised of midstream gathering, processing, and fractionation businesses in the Marcellus Shale region primarily in Pennsylvania, New York, and the Utica Shale region of eastern Ohio.

West is comprised of gas gathering, processing, and treating operations in the Rocky Mountain region of Colorado and Wyoming, the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of south Texas, the Haynesville Shale region of northwest Louisiana, and the Mid-Continent region which includes the Anadarko, Arkoma, and Permian basins.

This segment also includes NGL and natural gas marketing business, storage facilities, an undivided 50 percent interest in an NGL fractionator, a 50 percent equity-method investment in OPPL, a 50 percent equity-method investment in RMM, and a 15 percent equity-method investment in Brazos Permian II.

Where is the geographical reach of The Williams Companies?

Williams’ headquarters is in Tulsa, Oklahoma and has major offices in Salt Lake City, Utah; Houston, Texas; and Pittsburgh, Pennsylvania.

The company’s operations span a number of US states: with major centers in the four corners (the meeting place of New Mexico and Colorado); the Texas Gulf Coast, Louisiana, Mississippi, Alabama, the Utica Shale region of eastern Ohio, Marcellus Shale of Pennsylvania, and New York.

Its Transco pipeline operates in Texas, Louisiana, Mississippi, and the Gulf of Mexico through Alabama, Georgia, South Carolina, North Carolina, Virginia, Maryland, Delaware, Pennsylvania, New Jersey to the New York City metropolitan area and its Northwest pipeline goes from San Juan basin in northwestern New Mexico and southwestern Colorado through Colorado, Utah, Wyoming, Idaho, Oregon, and Washington to a point on the Canadian border near Sumas, Washington.

What is The Williams Companies’ Sales and Marketing Strategy?

The company market gas and NGL products to a wide range of users in the energy and petrochemical industries.

The NGL marketing business transports and markets equity NGLs from the production at processing plants, and also markets NGLs on behalf of third-party NGL producers, including some fee-based processing customers.

Williams interstate natural gas pipelines transport and store natural gas for a broad mix of customers, including local natural gas distribution companies, public utilities, municipalities, direct industrial users, electric power generators, natural gas marketers and producers.

The company have firm transportation and storage contracts that are generally long-term contracts. Additionally, the company offer storage services and interruptible transportation services under shorter-term agreements.

Transco’s and Northwest Pipeline’s three largest customers in 2019 accounted for approximately 28% and 48% of the company’s total revenue, respectively.

What is The Williams Companies Financial Performance?

Although revenue in the past several years was generally around $7.5 billion, it has increased in recent years. Revenue grew by 11% between 2015 and 2019, while net income has fluctuated in the same period. In the years 2015, 2016, and 2018, the company reported net losses.

Revenue fell by 6% to $8.2 billion in 2019, compared to $8.7 billion in the prior year. Service revenues ? commodity consideration decreased due to lower NGL prices and lower volumes primarily due to the absence of the company’s former Four Corners area operations.

In 2019, earnings considerably improved by $1.005 billion to $850 million; it had a net loss of $155 million the prior year.

This increase reflects a $1.5 billion decrease in impairment of certain assets, a $431 million increase in service revenues primarily associated with Transco expansion projects, the consolidation of UEOM beginning March 2019, and growth in Northeast G&P volumes, partially offset by lower revenues from its Barnett Shale operations, as well as the absence of revenues from operations sold or deconsolidated during 2018.

Cash on hand at the end of 2019 was $289 million, an increase of $121 million from 2018. Cash from operations contributed $3.7 billion to the coffers.

Investing activities spent a combined $2.8 billion, mostly on capital expenditures and purchases of businesses, offset by a $485 gain on the sale of its 50% equity-method interest in Jackalope. Financing activities used $745 million, mostly to pay dividends and long-term debt payment.

What is The Williams Companies Future Strategy?

The Williams Companies’ strategy is to provide large-scale energy infrastructure designed to maximize the opportunities created by the vast supply of natural gas and natural gas products that exists in the United States.

The company accomplishes this by connecting the growing demand for cleaner fuels and feedstocks with its major positions in the premier natural gas and natural gas products supply basins.

It continues to maintain a strong commitment to safety, environmental stewardship, operational excellence, and customer satisfaction.

The company’s growth capital and investment expenditures in 2020 are expected to be in a range from $1.1 billion to $1.3 billion Growth capital spending in 2020 primarily includes Transco expansions, all of which are fully contracted with firm transportation agreements, and its Bluestem NGL pipeline project in the Mid-Continent region.

In addition to growth capital and investment expenditures, it also remains committed to projects that maintain its assets for safe and reliable operations, as well as projects that meet legal, regulatory, and/or contractual commitments.

What are The Williams Companies’ Mergers and Acquisitions?

In early-2019, the company acquired the remaining 38% interest in UEOM. Total consideration paid was over $740 million. As a result of acquiring this additional interest, the company obtained control of and now consolidate UEOM.

What is The Williams Companies’ Background?

Williams were founded in 1908, originally incorporated under the laws of the state of Nevada in 1949 and reincorporated under the laws of the state of Delaware in 1987.

In 1957, The company traded publicly as an over-the-counter stock.

In 1998, Williams merged with MAPCO, whose assets happened to include a pipeline that Williams built in 1960, during the heyday of its construction business. Williams began investing to grow its business in the Marcellus producing area of the U.S. Northeast in 2009.

What is The Williams Companies’ History?

David Williams and his brother Miller were working for a construction contractor in 1908 when the contractor pulled out of a job paving sidewalks in Fort Smith, Arkansas. The brothers formed the Williams Brothers Corporation and completed the job themselves.

As the oil industry grew in Oklahoma, the brothers cashed in on the boom by building pipelines. Williams Brothers relocated its head office to Tulsa in 1924.

The two brothers sold the company in 1949 to David Jr., nephews John and Charles, and six company managers. It went public in 1957. In 1966 Williams Brothers bought its first gas pipeline network (the longest in the US), the Great Lakes Pipe Line Company (renamed Williams Brothers Pipe Line Company).

In 1969 Williams Brothers began entering new markets. It bought a metals processor, a propane dealer, and fertilizer companies, including Agrico Chemical (1972), and changed its name to The Williams Companies to reflect its new diversity.

In the wake of the Arab oil embargo, it formed Williams Exploration in 1974 to find natural gas. Two years later Williams became part-owner of the US’s #1 coal producer, Peabody Coal.

During a 1980s energy sales slump, Williams began dumping its commodity businesses (including Agrico and Peabody in 1987). Instead, it went into telecommunications in 1985, forming Williams Telecommunications (WilTel) to install fiber optics inside abandoned pipelines.

Its 1989 purchase of fiber-optic firm LIGHTNET brought its network miles to 11,000. In 1995 the company acquired Transcontinental Gas Pipe Line Corp. (Transco), extending its reach into the East, and Pekin Energy, the country’s #2 ethanol producer.

The Williams Companies sold WilTel’s fiber-optic network in 1995 to telecom company LDDS (which became WorldCom) for $2.5 billion — but excluded from the sale a 9,700-mile single fiber-optic strand along the original network.

In 1996 Williams acquired telecom services company Cycle-Sat, and the next year Williams Communications and Northern Telecom (later Nortel Networks) formed Williams Communications Solutions to distribute and integrate telecom networking equipment.

In 1998 Williams bought fellow Tulsa company MAPCO for more than $3 billion, giving it the US’s largest US pipeline system moving propane and butane, a leading US propane retailer (ThermoGas), refineries, and gas stations.

To re-enter the telecom business, Williams established a new subsidiary, Williams Communications, in 1998. To raise money to build out its network, the company sold a minority stake in Williams Communications in a 1999 IPO.

That year it also sold ThermoGas to Ferrellgas in a $444 million deal. The next year it joined Duke Energy in a $1.5 billion venture to build a gas pipeline across the Gulf of Mexico to link Alabama to Florida markets.

Williams spun off its stake in Williams Communications (later renamed WilTel Communications) to shareholders in 2001. Williams also shed energy assets that year: Its Williams Express sold its 186 MAPCO gas stations to The Israel Fuel Corporation for about $147 million.

The company moved to expand its natural gas reserves significantly by buying producer Barrett Resources for about $2.5 billion in cash and stock and $300 million in assumed debt.

Also in 2001 Williams chairman and CEO Keith Bailey announced plans to retire the next year. The heir apparent, EVP Steven Malcolm, was given Bailey’s title of president.

The day after Malcolm’s promotion, he announced that the company’s energy marketing and trading operations would become a separate business unit. Malcolm was named CEO in January 2002.

As a way to pare down its debt load, that year Williams sold its Kern River interstate natural gas pipeline to Berkshire Hathaway’s MidAmerican Energy Holdings unit for $450 million in cash and $510 million in assumed debt.

It also sold its Williams Pipe Line unit (refined petroleum products) to Williams Energy Partners LP for $1 billion, and its stakes in two pipeline companies (Mid-America Pipeline and Seminole Pipeline) to Enterprise Products Partners, for about $1.2 billion.

Also in 2002, in addition to raising cash from asset sales, Williams secured commitments from mega-investor Warren Buffett and a number of banks to pony up $2 billion in new financing to help it restructure its operations.

The next year Williams sold its wholesale propane assets and marketing business to SemGroup. It also sold a gas processing plant in Oklahoma to Eagle Rock Energy.

Williams planned to sell its power business (Williams Power) as part of a strategic plan to emphasize its core natural gas businesses, but dropped the idea in 2004, citing poor market conditions.

However, in 2007 it finally did sell this unit to Bear Stearns’ energy division for about $500 million. In 2007 Williams expanded its gas supply service to the US Northeast.

In 2008 the company acquired assets amounting to 175 billion cu. ft. of natural gas reserves in the Barnett Shale from Aspect Abundant Shale for about $147 million. The move increased Williams’ holdings in the Barnett Shale by nearly two-thirds, bolstering its reserve base.

In 2010 the company merged its Williams Pipeline Partners unit into Williams Partners. The move allowed Williams to pool its pipelines assets (including 14,600 miles of interstate natural gas pipeline and 8,500 miles of gas gathering lines), streamline its operations, and cut costs.

The $12 billion restructuring established Williams Partners as a major interstate pipeline and midstream player.

In 2011 Energy Transfer Equity made a bid to buy Southern Union. Williams, sensing an opportunity to expand its asset base, made a counter offer, but Energy Transfer Equity trumped its bid (pushing its offer up to $5.1 billion).

In a major move to raise capital to fund its reorganization in 2011 the company spun off its exploration and production unit (which had extensive exploration and production assets in the Rockies, Northeast and the Mid-Continent) as WPX Energy in a $750 million IPO.

In 2012 Williams expanded its presence in the Marcellus Shale play, buying assets from Delphi Midstream Partners, primarily the Laser Gathering System (33 miles of gas pipeline and associated gathering facilities in Susquehanna County, Pennsylvania, and 10 miles of gathering pipeline in southern New York).

That year it signed a new long-term gas processing agreement with a producer in the Canadian oil sands to extract, transport, fractionate, own and market NGLs and olefins recovered from the offgas at the oil sands producer’s upgrader near Fort McMurray.

In 2012 Williams Partners acquired Williams’ 83% stake in the Geismar olefins production facility, as well as Williams’ refinery-grade propylene splitter for $2.3 billion and US Gulf pipelines for $100 million

In 2012 the company acquired 50% Access GP and 25% of the limited partner units of Access Midstream Partners, LP (ACMP) for $2.4 billion. That year ACMP acquired most of Chesapeake Energy Corp.’s remaining natural gas and crude-oil gathering assets for $2.2 billion.

In 2013 Williams and Boardwalk Pipeline Partners formed a joint venture build a pipeline to develop the petrochemical market in the Northeast US by transporting natural gas liquids from the infrastructure-constrained Marcellus and Utica shale plays to the growing petrochemical and export complex on the US Gulf Coast.

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