Addressing The Williams Chesapeake Exposure
Williams Partners' Sell-Off Completely Unjustified
Thomas Lott • 39 Comments
Thomas Lott • 39 Comments
Yesterday, 11:54 PM
- The partners behind the proposed Constitution Pipeline earlier today asked the FERC for a 24-month extension until December 2018 to construct its 124-mile interstate pipeline from Susquehanna County, Pa., to Schoharie County, N.Y.
- FERC's initial approval had required completion of the extension by December 2016, but the project has been delayed because New York state regulators refused to grant a needed water quality certification in April.
- Williams Partners (NYSE:WPZ), Cabot Oil & Gas (NYSE:COG) and Piedmont Natural Gas (NYSE:PNY) are the partners behind the proposed $925M gas pipeline.
Yesterday, 3:15 PM
- Williams Cos. (WMB -0.8%) and Williams Partners (WPZ -0.7%) are resumed with Neutral ratings at Citigroup, which views the Williams complex as a relatively inexpensive valuation balanced by a need for reduced payouts and balance sheet right-sizing.
- Citi's Faisel Khan expects WMB to cut its quarterly dividend to $0.20, a 69% reduction, and WPZ to whack its distribution to $0.50, a 41% reduction; Khan thinks a distribution cut would provide much needed flexibility and allow WPZ to maintain its investment grade credit rating.
- Khan believes electing directors with industry experience and a track record of capital discipline are critical coming out of November's shareholder meeting, after earlier letters of resignation from activist board members were critical of current management and the resignation of other members cast some doubt over WMB's management team.
Thu, Jul. 14, 2:52 PM
- Williams Cos. (WMB +5.6%) moves sharply higher following a Reuters report that it has received at least seven bids for its Canada unit, in a potential sale that could fetch $1B-$2B.
- Interest has come from pipeline companies Enbridge (ENB -0.4%), Pembina (PBA +0.5%), Keyera (OTC:KEYUF) and Inter Pipeline (OTCPK:IPPLF), as well as three Canadian pension plans, and an unspecified number of U.S. companies, according to the report.
- The sale process reportedly is at an advanced stage, and a deal could result by the end of the month; interest is said to be strong, highlighting demand for midstream assets that offer a steady cash flow despite volatile oil prices.
- Also: WPZ +3.3%, EEP +0.1%.
Wed, Jul. 13, 12:27 PM
- Williams Cos. (WMB -0.9%) is reinstated with a Buy rating and $25 price target at Goldman Sachs, which says WMB offers a “compelling opportunity” in view of its robust fundamentals and relatively inexpensive valuation.
- Goldman highlights WMB's visible growth from well-contracted projects, and notes that Williams Partners (WPZ -0.5%) is expected to generate 7% consolidated EBITDA compound annual growth rate from 2015-20, resulting in solid cash flow at the company level.
- Investors should consider any weakness in shares following the dividend cut as a buying opportunity, the firm says.
- Morgan Stanley resumes coverage with a Neutral rating and a $24 price target, citing an attractive valuation but uncertainty from WMB's "full plate" in determining the correct GP/LP structure, potentially resetting the dividend, and business mix policies as the company grapples with a path of independence.
Sat, Jul. 2, 8:25 AM
- More turmoil could be ahead for Williams Cos. (NYSE:WMB) even after Energy Transfer Equity (NYSE:ETE) abandoned their merger deal, as the resignation of six board members who failed to oust CEO Alan Armstrong revealed a deep split in the company that may take months to heal.
- Two of the departing board members, Keith Meister and Eric Mandelblatt - who collectively control 8.4% of WMB - blasted Armstrong and the remaining board in their resignation letters (I, II) and indicated they would not sell their shares, which could set the stage for a proxy fight to remove the rest of the board.
- Gimme Credit's Phil Adams thinks the departures imply that WMB will pursue a “go it alone” strategy from here, possibly including a renewed effort to acquire the rest of Williams Partners (NYSE:WPZ); he thinks WMB may have a strong case if it sues ETE for damages or appeals the court’s ruling that favored ETE’s right to walk away from the merger.
- Bloomberg's Liam Denning thinks WMB should refocus on cutting costs and paying off debt, adding that a dividend cut looks likely and that Kinder Morgan's experience last December suggests it is "better to rip off the Band-Aid quickly" rather than slowly.
- Adams also has questions about ETE’s future and its business model, which includes several MLP subsidiaries including Energy Transfer Partners (NYSE:ETP), Sunoco LP (NYSE:SUN), and Sunoco Logistics Partners (NYSE:SXL).
Tue, Jun. 28, 5:42 PM
- The Enterprise Products Partners (NYSE:EPD) natural gas processing plant in Pascagoula, Miss., remains closed after today's fire, which is now under control but forced the closure of the 225-mile Destin gas pipeline system that can carry 1.2B cf/day from offshore fields to Pascagoula.
- Destin, majority-owned by BP with Enbridge (NYSE:ENB) a minority partner, declares force majeure as a result of the fire.
- Murphy Oil (NYSE:MUR) says it shut its Thunder Hawk platform, which also is connected to the Destin system and has the capacity to handle 60K bbl/day of oil and 70M cf/day of natural gas.
- LLOG, partially owned by the Blackstone Group (NYSE:BX), says it is shutting its Delta House floating production system, which has 100K bbl/day of oil and 240m cf/day of gas capacity.
- Williams Partners (NYSE:WPZ) says the Gulfstream Pipeline, a joint venture with Spectra Energy Partners (NYSE:SEP), appears to be unaffected.
- BP, whose Thunder Horse and Na Kika platforms tie into the Destin pipeline and together produce nearly 400K bbl/day of oil and more than 700M cf/day of natural gas, has not commented; the status of other Gulf producers which operate facilities that connect to Destin, including Stone Energy (NYSE:SGY) and Freeport McMoRan (NYSE:FCX), is not known.
Mon, Jun. 27, 8:32 AM
- Williams Cos. (NYSE:WMB) -6.6% premarket after Friday's court ruling likely ends the merger with Energy Transfer Equity (NYSE:ETE).
- Ahead of a shareholder meeting today, WMB continues to ask its shareholders to vote in favor of the deal, and WSJ reports it is considering appealing the ruling, and could sue ETE for damages if it loses that appeal.
- Assuming the merger does not work out, WMB must decide what sort of company it wants to be; former CEO Keith Bailey believes the company should go back to basics - “steady growth over time.”
- WMB already has telegraphed one move: Earlier this month, it said it may have to cut its $0.64 quarterly dividend by a “material” amount, perhaps by as much as 60%, says Evercore ISI's Timm Schneider.
- But WMB still has plenty going for it, with the assets - a vast network of pipes in the Marcellus shale formation and the 10k-mile Transco pipeline - that made it so appealing to ETE in the first place, and it could revisit a plan to buy its Williams Partners (NYSE:WPZ) MLP or entertain offers from another buyer.
- ETE +7.7% premarket.
Wed, Jun. 15, 7:34 AM| Wed, Jun. 15, 7:34 AM | 2 Comments
Tue, May 17, 8:57 AM
- The companies behind the proposed Constitution natural gas pipeline filed an appeal late yesterday arguing that the April decision by the state of New York to deny the project a key environmental permit was “arbitrary and capricious."
- The companies say they also filed a separate action seeking a declaration that New York’s authority to exercise permitting jurisdiction over certain other environmental matters is pre-empted by federal law.
- Williams Partners (NYSE:WPZ), Cabot Oil & Gas (NYSE:COG) and Piedmont Natural Gas (NYSE:PNY) are the stakeholders in the proposed $925M gas pipeline, which was denied a water quality permit by the New York Department of Environmental Conservation after failing to meet state standards.
Fri, May 13, 5:52 PM
- David Tepper and Appaloosa have filed their 13F, and while it shows new positions in Valeant (NYSE:VRX), Bank of America (NYSE:BAC), Facebook (NASDAQ:FB) and Fox (FOX, FOXA), a source told CNBC that he's already sold that Valeant stake.
- Shares in Valeant moved accordingly after the release: First up as much as 2.9% after hours, then back again to a 0.6% gain.
- Meanwhile, the firm notes dissolved stakes in Apple (AAPL, sold 1.26M shares), HP Enterprise (HPE, sold 3.66M shares) and Eastman Chemical (EMN, sold 700K shares).
- In energy bets, Tepper heavily increased stakes in Williams Partners (WPZ, +10.87M shares) and Energy Transfer Partners (ETP, +11M shares), while cutting a stake in Kinder Morgan (NYSE:KMI) by 4.95M shares.
Wed, May 11, 7:27 PM
- Bernstein analysts initiate several midstream and pipeline MLPs, estimating that less than 7% of MLPs $70B in service revenues are at risk in a $40/bbl oil environment; oil production volumes will likely fall this year, but midstream pipeline plays will mostly be unaffected, the firm says.
- On the other hand, the firm sees less long-term upside to MLPs than many investors expect, as after next year existing and in-progress gas and crude infrastructure will be sufficient to handle forward production through 2025.
- Bernstein prefers Enterprise Products Partners (NYSE:EPD) because of its significant committed market-based projects, and Williams Partners (NYSE:WPZ) and Williams Cos. (NYSE:WMB) on the belief they have been unfairly punished due to expected dividend cuts; the firm rates EPD, WPZ and WMB at Outperform.
- Bernstein ranks Kinder Morgan (NYSE:KMI), Spectra Energy (NYSE:SE), Spectra Energy Partners (NYSE:SEP), Energy Transfer Partners (NYSE:ETP), Energy Transfer Equity (NYSE:ETE), Cheniere Energy (NYSEMKT:LNG) and Cheniere Energy Partners (NYSEMKT:CQP) at Market Perform; the only name rated Underperform is Sunoco Logistics (NYSE:SXL).
- ETFs: AMLP, AMJ, KYN, YMLP, TYG, KYE, SRV, CEM, MLPI, NML, FEN, NTG, KMF, MLPA, EMLP, FMO, AMZA, FEI, JMF, SRF, CBA, MLPG, MLPN, GMZ, MLPX, GER, EMO, MLPY, TTP, CTR, MLPS, CEN, ZMLP, SMM, DSE, FPL, AMU, MIE, YMLI, JMLP, ENFR, ATMP, MLPW, MLPC, IMLP
Thu, May 5, 12:38 PM
- "We can't close this deal," Energy Transfer Equity (ETE +6.4%) CEO Kelcy Warren says of the takeover of Williams Cos. (WMB +3.9%) without the tax opinion that would deem the transaction an exchange that frees shareholders from tax liabilities.
- "Absent a substantial restructuring of this transaction, which Energy Transfer has been very willing and actually desiring to do, absent that, we don't have a deal," Warren said in today's earnings conference call, adding that ETE would be open to a deal that would remove the cash portion of its cash-and-stock bid for WMB.
- ETE general counsel Thomas Mason said on the call that adviser Latham & Watkins had looked for a solution to the tax problem but had failed to find one, and legal advisers reached the same conclusion; he said either party could walk away from the deal after a June 28 deadline, but that ETE is "not focused" on that right now.
- Also: ETP +8.9%, WPZ +3.4%.
- Now read Energy Transfer nixes Williams proposals to resolve tax issues
Wed, May 4, 5:07 PM
Tue, Apr. 26, 5:44 PM
Mon, Apr. 25, 5:35 PM
- Developers of the 124-mile Constitution Pipeline say they will challenge New York’s rejection of a critical water quality permit.
- The backers of the pipeline - Cabot Oil & Gas (NYSE:COG), Williams Partners (NYSE:WPZ) and Piedmont Natural Gas (NYSE:PNY) say the decision was politically motivated and that the state's denial letter contained “flagrant misstatements and inaccurate allegations."
- The pipeline had received approval from the FERC in 2014, but the state regulator said it would have crossed 250 streams in New York and had a significant impact on unique ecosystems.
- The group can appeal the state decision to the U.S. Circuit Court of Appeals.
Fri, Apr. 22, 6:57 PM
- New York environmental regulators reject a critical permit needed to build the Constitution Pipeline, saying the project fails to meet standards that protect streams, wetlands and other water resources in its path.
- The FERC approved the natural gas pipeline in 2014 contingent on the state permit, which is required by the federal Clean Water Act; the project had all necessary permits for a segment in Pennsylvania and already cleared trees there in preparation for construction.
- Constitution Pipeline Company, a partnership formed by Cabot Oil & Gas (NYSE:COG), Williams Partners (NYSE:WPZ) and Piedmont Natural Gas (NYSE:PNY), can appeal the state decision.
- Now read Kinder Morgan pipeline shelved but Constitution Pipeline still set to go
Williams Partners LP owns, operates, develops and acquires natural gas, natural gas liquids and oil gathering systems and other midstream energy assets. It provides gathering, treating and compression services to Chesapeake Energy Corp., Total Gas & Power North America, Inc., Statoil ASA,... More
Sector: Basic Materials
Industry: Specialty Chemicals
Country: United States
Other News & PR