WMB
Williams Companies Inc
Utilities, Energy
07/26/2016
Presented
| Date | 07/20/2016 |
| Price | $25.13 |
| Market Cap | $18.86B |
| Ent Value | $46.64B |
| P/E Ratio | N/A |
| Book Value | $7.59 |
| Div Yield | 0% |
| Shares O/S | 750.33M |
| Ave Daily Vol | 11,468,854 |
| Short Int | 1.75% |
Current
| Price | $50.90 |
| Market Cap | $62.04B |
| 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 four segments: Williams Partners, Williams NGL & Petchem Services, Access Midstream Partners and Others. The Williams Partners segment includes gas pipeline and domestic midstream businesses. The gas pipeline business includes interstate natural gas pipelines and pipeline joint venture investments, and the midstream business provides natural gas gathering, treating and processing services; NGL production, fractionation, storage, marketing and transportation and deepwater production handling and crude oil transportation services. The Williams NGL & Petchem Services comprises of Canadian midstream operations include an oil sands off gas processing plant located at Fort McMurray, Alberta, and an NGL/olefin fractionation facility and butylenes/butane splitter facility, both of which are located at Redwater, Alberta. The Access Midstream Partners segment comprises of an indirect equity interest in Access Midstream Partners GP, L.L.C. and limited partner interests in Access Midstream Partners, L.P., which provides gathering, processing, treating and compression services to Chesapeake Energy Corporation and other producers under long-term, fee-based contracts. The Other segment comprises of corporate operations. The company was founded in 1908 by David Williams and Miller Williams and is headquartered in Tulsa, OK. |
Publicly traded companies mentioned herein: Energy Transfer Equity LP (ETE), Kinder Morgan Inc (KMI), Plains All American Pipeline LP (PAA), Williams Companies Inc (WMB), Williams Partners LP (WPZ)
Highlights
The presenter is optimistic about the outlook for Williams Companies (WMB) shares following the termination of the Energy Transfer Equity (ETE) deal. With Plains’ “simplification agreement” and Kinder Morgan’s recent asset sales being well received by the market, he is confident that investors will respond favorably to constructive news. He is long at ~$25 and views the risk/ reward as favorable heading into Q2 2016 earnings (expected to be announced August 1, 2016 after the market closes). In his opinion, estimates for where WPZ’s leverage will go are too low, and the dividend cut is likely to be less than feared. Whatever plan management announces will likely have some kind of asset sale involved as well. Looking out to 2018-19, he is forecasting WPZ’s leverage to decline to a run-rate in the 4-4.5x range (versus the Street’s mid-to-high 3s assumption) and based on his model this results in WMB’s distributable cash flow (DCF) equating to $2.40/ share at 4x and $3.20 at 4.5x. At 20x, shares would be worth $48+.
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