Williams Cos. Inc. (WMB)

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Analyzing Williams Companies and Williams Partners' 2Q16 Results

http://marketrealist.com/2016/08/drove-williams-partners-2q16-ebitda-growth/

What Drove Williams Partners’ 2Q16 EBITDA Growth?

By Kurt Gallon
Aug 3, 2016 12:33 pm EDT


Williams Partners’ 2Q16 EBITDA

Williams Companies (WMB) and its MLP subsidiary, Williams Partners (WPZ), reported their 2Q16 earnings on August 1, 2016. Energy Transfer Equity (ETE) is scheduled to report its 2Q16 earnings on August 3. For an earnings preview on Energy Transfer Equity and its subsidiaries, read What to Expect from ETE’s, ETP’s, and SXL’s 2Q16 Earnings.




What Drove Williams Partners’ 2Q16 EBITDA Growth?

Williams Companies’ earnings mainly depend on distribution income from Williams Partners. Therefore, Williams Partners’ EBITDA (earnings before interest, tax, depreciation, and amortization) growth drives Williams Companies’ earnings. Williams Partners’ 2Q16 adjusted EBITDA increased to $1.1 billion from $1.0 billion in 2Q15—a YoY (year-over-year) increase of 6.4%. However, the partnership missed its 2Q16 EBITDA estimate marginally by 0.7%.


Williams Partners’ 2Q16 EBITDA drivers

The YoY change in Williams Partners’ 2Q16 EBITDA was mainly driven by the following factors:

Atlantic-Gulf segment – The segment saw a 6.2% YoY EBITDA decline in 2Q16 driven mainly by a one-month shutdown at Gulfstar One. This was slightly offset by expansion projects placed into service.

Central segment – The segment includes operations “that were previously part of the former Access Midstream segment located in Louisiana, Texas, Arkansas, and Oklahoma.” The segment’s 2Q16 performance benefited from cost-cutting measures.

NGL & Petchem Services segment – The segment’s adjusted EBITDA increased to $80 million in 2Q16 from $33 million in 2Q15. The YoY jump in adjusted EBITDA was mainly driven by higher olefins margins.
Northeast G&P segment – The Northeast G&P segment posted 5.4% YoY EBITDA growth in 2Q16 driven by lower operating and G&A (general & administrative) expenses.

West segment – The segment benefited from lower operating and G&A expenses in 2Q16.

In the next part, we’ll look at the companies’ 2Q16 distributions and Williams Companies’ reinvestment plans.