Addressing The Williams Chesapeake Exposure
Williams Companies: Playing The Gas Infrastructure Super-Cycle
Stanislav Ermilov • 26 Comments
Stanislav Ermilov • 26 Comments
Oct. 28, 2015, 5:18 PM
- Williams (NYSE:WMB): Q3 EPS of $0.22 in-line.
Oct. 27, 2015, 5:35 PM
- ABX, ACGL, AEM, AF, AFFX, AFOP, AMGN, ANIK, AR, ARII, ARRS, ASGN, ATML, BANC, BLKB, BWLD, CACI, CAVM, CBL, CGI, CHDN, CLI, CMO, CMPR, CNL, CNO, CNW, CRUS, CSGP, CW, CWT, DRE, DYAX, ECHO, ELLI, EPR, EQIX, EQY, ESIO, ESRT, ESV, EXR, FFIV, FMC, FORM, FORR, FR, GPRO, HBI, HLS, HOS, HT, HUBG, HY, INT, INVN, ISIL, KEX, KRA, KS, LNC, LOCK, LOPE, MAA, MANT, MAR, MC, MEOH, MMLP, MTGE, MTW, MUR, NE, NEM, NGD, NSIT, NTRI, NVDQ, NXPI, O, OCN, OGS, OII, ORLY, OTEX, PLXS, PPC, PRXL, PSA, PTC, QDEL, QEP, QGEN, QUIK, REG, ROG, ROVI, RRC, SCI, SGI, SGMO, SIMO, SPN, SPRT, SPWR, SSS, STAA, SU, TAL, THG, THRX, TILE, TLLP, TSO, TTMI, UNM, VAR, VECO, VRTX, WDC, WES, WGP, WLL, WMB, WSTL, WTS, YELP
Oct. 22, 2015, 3:30 PM
- MLPs are under pressure following Kinder Morgan's (KMI -5.7%) disappointing Q3 report in which it cut guidance for 2016 distribution growth (I, II)
- KMI is no longer classified as an MLP but its relevance to the group remains strong, and MLPs have needed to rely on access to the capital markets; 24/7's Jon Ogg explains that KMI's vagueness about its plans to access new capital has dragged down the entire MLP sector today: MMP -3.5%, EPD -3.2%, ETP -3.1%, ETE -2.2%, WMB -1.8%, PAA -1.4%.
- "There is just no getting away from the fact that a major energy company with a market capitalization of $69B just said that its access to public equity now comes at such a cost that it will go elsewhere, [which] should cause at least a few ripples of concern across the industry," Bloomberg's Liam Denning writes.
- Brace for more waiting games from MLPs this quarter, Wunderlich's Jeff Birnbaum says, expecting many companies to delay providing their 2016 forecasts until later in the year when they have better indications from upstream companies about their plans, which could lead to renewed selling after a 20% gain in the Alerian MLP Index since it bottomed Sept. 29.
- ETFs: AMLP, AMJ, KYN, MLPL, TYG, SRV, KYE, CEM, MLPI, NML, FEN, NTG, MLPA, KMF, EMLP, FMO, MLPN, SRF, FEI, JMF, CBA, MLPX, GMZ, EMO, MLPS, TTP, CTR, AMU, CEN, GER, AMZA, SMM, MIE, DSE, ENFR, FPL, ATMP, JMLP
Oct. 9, 2015, 2:36 PM
- Williams Cos. (WMB, WPZ) delays the return to service date for its Southeast Louisiana Lateral pipeline after an explosion and fire killed three workers yesterday.
- WMB says the line already had been shut for planned maintenance and was expected to return to service on Oct. 12 before the blast; the return to service date is now unknown.
- Before the maintenance outage, which shut the entire pipeline, ~190M cf/day of gas flowed through the line.
Oct. 7, 2015, 8:22 PM
- Energy Transfer (ETE, ETP) and Williams Cos. (WMB, WPZ) are planning to sell WMB’s stake in one of Florida’s main interstate pipelines to win regulatory approval for $37B merger, Bloomberg reported earlier.
- The companies anticipate that a sale of WMB’s 50% stake in the Gulfstream Natural Gas System will be required by the FTC, and WMB may explore selling its stake to Spectra Energy Partners (NYSE:SEP), according to the report.
Sep. 30, 2015, 8:54 PM
- A new report from corporate bond research firm Gimme Credit points to one more reason investors may have reacted so negatively to Energy Transfer Equity's (NYSE:ETE) takeover of Williams Cos. (NYSE:WMB): The Energy Transfer family is getting too big and too complex.
- If approved by shareholders, ETE would form a new partnership, Energy Transfer Corp., which will be treated as a C-corp and merge with WMB; at closing next year, ETE and ETC would be “holdcos" for four publicly-traded MLPs - WPZ, ETP, SXL and SUN.
- ETE says it is committed to the multi-entity structure "despite the concern that ETE entities (combined) are trading at a discount to a simplified" Kinder Morgan (NYSE:KMI), Gimme Credit says.
- ETE, WMB and WPZ all bounced sharply higher in today's trading, but each still has dropped more than 10% since the announcement.
Sep. 30, 2015, 3:56 PM
- Veresen (OTC:FCGYF) is awarded a final environmental impact statement by U.S. regulators, a key hurdle on the way to winning approval to build the $7B Jordan Cove liquefied natural gas export terminal in Oregon.
- The company says the FERC issued the permit for its 100%-owned project as well as the Pacific Connector Gas Pipeline it owns in partnership with a Williams Cos. (NYSE:WMB) subsidiary.
- The planned export terminal at Coos Bay, Ore., would have the capacity to receive 1.03B cf/day of gas and produce up to 6.8M metric tons/year of LNG; a 390 km natural gas pipeline from Malin, Ore., to the terminal would deliver gas originating in Canada and the U.S. Rocky Mountain region.
- Veresen says it expects to obtain a FERC notice to proceed in mid-2016, allowing it to make a final investment decision.
Sep. 28, 2015, 7:45 PM
- "It’s clearly a disappointing deal” for investors, says Jay Hatfield, portfolio manager of the InfraCap MLP exchange-traded fund, of Energy Transfer Equity's (ETE, ETP) takeover of Williams Cos. (WMB, WPZ), but bad timing and evidence of panic selling among MLPs exacerbated today's selloff.
- But Hatfield is not against the deal or the MLP space, seeing eventual upside for ETE but perhaps not be until 2016, when deal closes and energy prices have stabilized; "It is a great idea for 2016, but there may be better opportunities before then," Hatfield says.
- One reason for the extreme nature of today's selloff could be that there is little liquidity and few buyers in the energy market right now, and particularly the midstream energy market where ETE and WMB operate, says Tudor Pickering's Brandon Blossman.
- ETE shareholders also may be concerned the company is converting to a corporate structure as part of the deal, which plays into growing talk that the MLP business model may not survive the current difficulties.
- "We now believe the financial operating structure of the MLP may not survive in its current form, even as we say that most businesses using the MLP model are good ones,” writes Brian Nelson, president of Valuentum Securities; he thinks the stock market eventually will demand that MLPs pay their distributions and dividends out of earnings and traditional free cash flow, causing the declines in their unit prices to continue.
- ETFs: AMLP, AMJ, KYN, MLPL, TYG, SRV, KYE, CEM, MLPI, NML, FEN, NTG, MLPA, KMF, EMLP, FMO, MLPN, SRF, FEI, JMF, CBA, MLPX, GMZ, EMO, MLPS, TTP, CTR, AMU, CEN, GER, AMZA, SMM, MIE, DSE, ENFR, FPL, ATMP, JMLP, MLPW
Sep. 28, 2015, 11:39 AM
- Investors are balking at Energy Transfer Equity's (ETE -8.9%) just-announced merger with Williams Cos. (WMB -8.6%), as shares in the two oil and gas pipeline companies sell off sharply.
- WMB appears not to have needed to do much to sweeten its offer: "At first glance, it seems as if the bid matches ETE’s original offer made in June,” Raymond James analysts say - since both companies’ shares have fallen since the potential deal first became public, the headline deal number is now much lower than the $48B value announced in June.
- While plunging oil and natural gas prices have not hit pipeline operators as hard as other energy companies, analysts say the group is facing pressure to merge; prices also have fallen for fuels such as ethane and propane, which has hurt companies like WMB, which processes natural gas.
- Despite the immediate negative reaction, ETE claims the merger will enable it to capture $2.4B or more in commercial and cost-saving synergies over the next few years.
- Kinder Morgan (KMI -3.8%) and Spectra Energy (SE -3.4%) were among the other companies reportedly interested in acquiring WMB.
- Also: WPZ -7.7%, ETP -6.1%.
Sep. 28, 2015, 7:23 AM
- Energy Transfer Equity (NYSE:ETE) agrees to acquire Williams Cos. (NYSE:WMB) in a deal valued at $37.7B, implying a price of $43.50/share, to create the third largest energy franchise in North America and one of the five largest global energy companies.
- ETE and WMB say the transaction is immediately accretive to cash flow and distributions for both companies, and anticipate commercial synergies exceeding $2B of incremental EBITDA by 2020, with up to $400M of additional cost savings expected from the implementation of ETE's shared service model.
- WMB is terminating its previous plan to acquire Williams Partners (NYSE:WPZ); WMB will pay WPZ a $428M termination fee.
Sep. 23, 2015, 3:15 PM
- Williams Cos. (WMB -3.8%) board is preparing to meet as soon as this week to consider a sale to Energy Transfer Equity (ETE -3.7%) in response to a revised offer, Reuters reports.
- ETE has offered to tweak its all-stock offer for WMB, which is currently worth ~$34B, and pay for ~15% of the deal with cash, according to the report.
- The bid was worth ~$48B in June when WMB rejected an acquisition proposal from ETE, and share prices have since dropped along with oil prices.
- Also: WPZ -4.4%, ETP -2.5%.
Sep. 16, 2015, 4:33 PM
- Energy Transfer Equity (ETE, ETP) is close to winning its takeover fight for rival pipeline operator Williams Cos. (WMB, WPZ), and a deal could be announced in the next week and a half, Bloomberg reports.
- A deal would end a battle that went public in June, when WMB publicly rejected ETE’s unsolicited $53B bid and hired banks to explore a sale; it is not known if ETE has changed the terms of its initial proposal.
Sep. 11, 2015, 7:30 PM
- Williams Cos. (NYSE:WMB) declares $0.64/share quarterly dividend, +14% from Q3 2014 dividend and +8.5% from Q2 2015 dividend.
- Payable Sept. 30 for shareholders of record Sept. 24.
- WMB +0.6% AH.
Sep. 11, 2015, 6:24 PM
- Spectra Energy (NYSE:SE) has exited the auction process for Williams Cos. (WMB, WPZ), increasing the possibility that Energy Transfer Equity (ETE, ETP) could succeed in buying the company, Reuters reports.
- ETE and WMB are said to be negotiating and trying to agree over the share portion of the offer, with ETE offering new shares that have never traded in the public market and WMB viewing the valuation for those shares as untested.
- ETE has hinted that it could launch a hostile takeover if discussions fall through.
Sep. 10, 2015, 12:57 PM
- Williams Cos. (WMB -4.2%) is downgraded to Market Perform from Outperform at Wells Fargo, citing “a less attractive risk-reward balance when considering the potential outcomes” of the review process on which bid to accept among several potential acquirers.
- Wells thinks Energy Transfer Equity (ETE -1.1%) will win out but says the deteriorating macro environment makes analysts less confident; a decision to reject ETE and go solo, folding in its Williams Partners (WPZ -0.2%) MLP, would mean significant downside risk to the share price, the firm says.
- Wells’ best advice for investors who want exposure to Williams is to buy WPZ, which the firm believes has upside either way.
Sep. 8, 2015, 3:49 PM
- Williams Cos. (WMB +1.4%) renegotiated contracts with Chesapeake Energy (CHK +5.3%) are supposed to be positive for WMB's EBITDA, but Amey Stone at Barron's says several MLP contracts likely will be rewritten in the coming months resulting in tougher terms for the midstream MLPs that provide the storage and transportation.
- Janney analyst Nathan Judge argues that such negotiations are healthy for the recovery of MLPs, saying the deals often will result in positive outcomes for the MLP and may be supportive for a recovery in the group as fears diminish.
- The MLP usually has the upper hand in contract renegotiations, Judge believes, as customers that wish to renegotiate must make it economically attractive to the MLP to make changes; also, if the customer expects to grow, it will need to incentivize the MLP to invest, which was clear from the WMB-CHK deal.
The Williams Cos., Inc. operates as an integrated natural gas company that explores, produces, transports, sells and processes natural gas and petroleum products. It operates through three segments: Williams Partners, Williams NGL & Petchem Services and Others. The Williams Partners segment... More
Sector: Basic Materials
Industry: Oil & Gas Pipelines
Country: United States