Williams Reports Year-End 2013 Financial Results
OREANDA-NEWS. 2013 Net Income is USD 430 Million, USD 0.62 per Share; Results Impacted by Lower NGL Margins, Extended Outage at Olefins Plant.
Adjusted Net Income USD 559 Million or USD 0.81 per Share.
Williams Partners' Fee-based Revenue Up USD 209 Million or 8% vs. 2012.
Continue to Expect More Than 50% Growth in Adjusted Segment Profit + DD&A for 2013 vs. 2015 Guidance Period.
Geismar Startup Delayed Until June; Expect BI Insurance to Substantially Offset Financial Impact.
Williams Partners' Transco Contracts and Adds Large-Scale Atlantic Sunrise Project to Guidance.
Proposed Bluegrass Project Timing Revised to Better Match Producer Needs.
Reaffirming Cash-Dividend Growth of 20% in each of 2014 and 2015.
Williams (NYSE: WMB) announced 2013 unaudited net income attributable to Williams of USD 430 million, or USD 0.62 per share on a diluted basis, compared with net income of USD 859 million, or USD 1.37 per share on a diluted basis for 2012.
The decline in net income for 2013 was primarily due to lower natural gas liquids (NGL) margins at Williams Partners, as well as the absence of USD 207 million of income in first-quarter 2012 associated with the sale of certain of the company's former Venezuela operations, of which USD 144 million was recorded within discontinued operations. Full-year results were also impacted by over six months of lost production at the Williams Partners' Geismar olefins plant and USD 99 million of tax expense on undistributed foreign earnings related to the planned dropdown of our Canadian operations to Williams Partners, which is expected to close by the end of February 2014.
For fourth-quarter 2013, Williams reported a net loss of USD 14 million, or USD .02 per share on a diluted basis, compared with net income of USD 149 million, or USD 0.23 per share, for fourth-quarter 2012.
The decrease in fourth-quarter 2013 net income was primarily due to Williams Partners' Geismar olefins plant being out of service for the entire fourth quarter and a decrease in NGL margins. The fourth quarter was also impacted by the previously mentioned USD 99 million of tax expense related to the planned Canadian dropdown. These declines were offset by an increase in fee-based revenues at Williams Partners and increased equity earnings from Access Midstream Partners.
Adjusted Income from Continuing Operations
Adjusted income from continuing operations was USD 559 million, or USD 0.81 per share, for 2013, compared with USD 695 million or USD 1.11 per share for 2012. For fourth-quarter 2013, adjusted income from continuing operations was USD 148 million, or USD 0.22 per share, compared with USD 160 million, or USD 0.25 per share for fourth quarter 2012.
Lower NGL margins at Williams Partners, including the effects of system-wide ethane rejection, as well as the unmitigated portion of the Geismar plant outage drove the decline in adjusted income from continuing operations during 2013. These were partially offset by higher fee-based revenues and Access Midstream Partners equity earnings in 2013.
Adjusted income from continuing operations reflects the removal of items considered unrepresentative of ongoing operations and is a non-GAAP measure. A reconciliation to the most relevant GAAP measure is attached to this news release.
CEO Comment
Alan Armstrong, Williams' president and chief executive officer, made the following comments:
"In the face of the past year's challenges presented by the continued decline in NGL margins and the significant and tragic Geismar incident, we continued to focus on significantly growing our fee-based revenues. This growth was steady throughout 2013 and we expect it to grow even faster in 2014 and 2015 as we deliver on major projects for our customers in a safe and reliable manner. We also continued to win significant new business that will support strong dividend growth for years to come. We increased our full-year dividend to shareholders by 20 percent and we expect strong cash flow growth from Williams Partners and Access Midstream Partners to drive this level of annual dividend growth through the 2014 to 2015 guidance period.
"Late in 2013, we placed into service a number of important projects and we expect to place into service approximately USD 4.5 billion in new growth projects at the partnership level and an additional USD 800 million at the Williams level in 2014 and 2015. We continue growing our gathering and processing operations to meet producer needs in the Northeast while following through on a roster of Transco expansions to serve growing markets along the Eastern Seaboard. In the Gulf of Mexico, we're on schedule to bring into service significant deepwater infrastructure that is well supported by anchor customers and positioned for further upside as the deepwater Gulf of Mexico accelerates.
"In our NGL & Petchem Services business, we are moving the target in-service timing of the joint-venture Bluegrass Pipeline project to mid-to-late 2016 to better align with the needs of producers. We continue to engage in ongoing discussions with potential customers regarding commitments to this large-scale, integrated solution that connects Marcellus-Utica natural gas liquids to diverse domestic markets, fractionation, storage and export facilities in the Gulf Coast.
"We continue to see tremendous appetite for additional firm natural gas transportation capacity from a range of industry participants, as evidenced by our fully-contracted Atlantic Sunrise project, and we've identified abundant opportunities to help connect the very best supply basins with the fastest growing markets by building out large-scale, market-integrated infrastructure," Armstrong said.
Business Segment Results
Williams' business segments for financial reporting are Williams Partners, Williams NGL & Petchem Services, Access Midstream Partners, and Other.
The Williams Partners segment includes the consolidated results of Williams Partners L.P. (NYSE:WPZ); Williams NGL & Petchem Services includes the results of Williams' Canadian midstream businesses; and Access Midstream Partners includes the company's equity earnings from its 50-percent interest in privately held Access Midstream Partners GP, L.L.C. and an approximate 23-percent limited-partner interest in Access Midstream Partners, L.P. (NYSE: ACMP). Prior period segment results have been recast to reflect Williams Partners' acquisition of Williams' Gulf Olefins business, which was completed in November 2012.
Williams Partners
Williams Partners is focused on natural gas transportation, gathering, treating, processing and storage; natural gas liquids fractionation, storage and transportation; olefins production; and oil transportation.
For 2013, Williams Partners reported segment profit of USD 1.61 billion, compared with USD 1.81 billion for 2012. For fourth quarter 2013, Williams Partners reported segment profit of USD 342 million, compared with USD 441 million for fourth quarter 2012.
The decline in Williams Partners' segment profit during 2013 is primarily due to USD 297 million, or 39 percent, lower NGLs margins, as well as the Geismar olefins plant being out of service in the third and fourth quarters. The decrease was partially offset by a USD 209 million, or 8 percent, increase in fee-based revenues and by USD 50 million of insurance recoveries related to the Geismar incident.
There is a more detailed description of Williams Partners' business results in the partnership's 2013 financial results news release, also issued today.
Williams NGL & Petchem Services
Williams NGL & Petchem Services primarily includes Williams' midstream operations in Alberta, Canada, including an oil sands offgas processing plant near Fort McMurray, 260 miles of NGL and olefins pipelines and an NGL/olefins fractionation facility and butylene/butane splitter facility at Redwater. Williams NGL & Petchem Services also includes the proposed Bluegrass Pipeline.
Williams NGL & Petchem Services reported segment profit of USD 38 million for 2013, compared with segment profit of USD 99 million for 2012. For the fourth quarter of 2013, Williams NGL & Petchem Services reported segment loss of USD 18 million, compared with segment profit of USD 27 million for the fourth quarter 2012.
The decline in segment profit during the year and the fourth quarter was primarily due to a scheduled shutdown for maintenance and tie-in of the newly constructed and commissioned ethane recovery facilities, as well as a third-party outage. Additionally, the write-off of USD 20 million costs associated with a canceled pipeline project in 2013 contributed to lower results.
Access Midstream Partners
The 2013 segment profit of USD 61 million for Access Midstream Partners includes USD 93 million of equity earnings recognized from Access Midstream Partners, L.P. reduced by USD 63 million noncash amortization of the difference between the cost of Williams' investment and the company's underlying share of the net assets of Access Midstream Partners, L.P., as well as noncash gains of USD 31 million resulting from Access Midstream Partners' equity issuances in 2013. These equity issuances resulted in the dilution of our ownership of limited partnership units from approximately 24 percent to 23 percent, which is accounted for as though we sold a portion of our investment. In 2013, Williams received regular quarterly distributions totaling USD 93 million from Access Midstream Partners, L.P.
ACMP raised its fourth quarter cash distribution by 23.3 percent compared to the prior year and 3.7 percent compared to the prior quarter.
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