Seeking Alpha

CapGoodsAlpha's  Instablog

CapGoodsAlpha
Send Message
Twenty-five plus years of excellence in economic, industry and market analysis including equity research, portfolio management, capital markets, business development and strategy. Deep, broad relationships with chief executives and their management teams, institutional investors, industry... More
My company:
LANGENBERG & COMPANY
My blog:
TheFirstShift
  • WHY WILLIAMS COMPANIES CAPEX WILL PAY OFF IN RICH DIVIDENDS 0 comments
    May 16, 2014 6:05 PM | about stocks: WMB, WPZ, ACMP, AME, EMR, HON, ABB

    Analysis prepared by Nathan Yates, Research Associate

    Key take-aways from Williams Companies investor day:

    U.S. natural gas market - see 3% supply growth, 2% demand growth to 2030. Goal to be #1 or #2 North American gas infrastructure developer.

    Northeastern shale plays (Marcellus, Utica) - volumes up 64% in 2013; expect to double by '16 to 4 Bcf/d.

    Geismar update - #2 cash-generating facility offline since 2013.06.13 due to explosion but repairs 93% complete.

    NGL Supply Growing - requires movement from source of production to demand centers on the Gulf Coast and in the industrial Midwest/Northeast. This has driven a capital spending ramp….

    Capital spending - which is peaking in 2014.

    Entity (Ticker)

    2014

    2015

    2016

    Williams Companies (NYSE:WMB)

    $455-565

    $405-505

    $470-630

    Williams MLP (NYSE:WPZ)

    3,305-3,875

    2,195-2,705

    2,050-2,510

    Access Midstream JV (NYSE:ACMP)

    1,100-1,200

    900-1,000

    600-800

    Totals

    $4,860-5,640

    $3,500-4,210

    $3,120-3,940

    Change - midpoint

     

    (27%)

    (8%)

    Industrial company impact: These companies may face (manageable) headwinds in their midstream businesses beginning in 2015 - AME, ABB, HON, EMR.

    As capacity additions ramp and capital spending falls shareholders and unit holders benefit….

    Dividends - parent company distributions will grow faster than MLP through '16.

    - Williams Companies (WMB) - expect 20% per annum through 2016. High coverage.

    - Williams MLP (WPZ) - distributions up 6% in 2014-15 with 4.5% growth in 2016.

    - Access Midstream (ACMP) - paid $1.94 in '13; see 178% growth to '16 implies $5.39.

    We think investors who care about growing dividends should give ACMP a look. The units closed at $59.04 today and assuming even a 5% dividend yield in '16 could trade to $105+ over the next 2-3 years.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: industrials, energy, MLP, midstream Stocks: WMB, WPZ, ACMP, AME, EMR, HON, ABB
Back To CapGoodsAlpha's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

  • $GE - updated 4Q and full year estimates just released to First Call at $0.56 and $1.66 respectively from $0.55 / $1.65. 2015 remains $1.75.
    Dec 2, 2014
  • $DE - scratching my head on JP Morgan upgrade within 5% of 52 week high, farm cycle rolling over and Brazil sucking wind.
    Dec 2, 2014
  • $UTX - calls to spin Sikorsky are flawed. Business earns high returns - 11% ROA, >20% ROIC and >25% RONA. Good asset.
    Nov 26, 2014
More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.