Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Williams Companies Inc (WMB, Financial) delivered record second-quarter results, driven by strong performance in their transmission and storage business.
- The company placed several key projects into service ahead of schedule and under budget, including Transco's regional energy access.
- Williams Companies Inc (WMB) is on track to achieve the top half of their 2024 EBITDA guidance and reaffirmed expectations for 2025.
- The company has executed significant emissions reductions and cost savings, replacing 57 transmission compressor units with modern low-emission equipment.
- Williams Companies Inc (WMB) has a strong focus on optimizing their asset portfolio, including selling their stake in the Aux Sable joint venture and consolidating ownership in the Gulf of Mexico Discovery system.
Negative Points
- The DC Circuit Court issued a decision to vacate the FERC certificate for ARIA, posing potential legal and regulatory challenges.
- Despite strong performance, the gathering and processing business faced challenges due to low natural gas prices.
- The company experienced lower Northeast gathering volumes driven by temporary producer reductions.
- Williams Companies Inc (WMB) had to manage planned downtime in the Eastern Gulf of Mexico, impacting segment growth.
- The adjusted EPS growth for the second quarter was slower compared to the five-year CAGR, indicating potential challenges in maintaining high growth rates.
Q & A Highlights
Q: Can you give us a sense of the size and scope of some of the other data center projects that you're looking at in the backlog? And how do you think about the returns on future projects for SES?
A: Alan Armstrong, President, Chief Executive Officer, Director: Our return on SES is even better than expected, the best we've seen on a large-scale project. We have a long backlog of projects, particularly in the Southeast and Mid-Atlantic. We're overwhelmed with requests and are focusing on making the highest use of our assets. The returns on future projects are expected to be very high.
Q: What are the next steps for REA following the DC Circuit Court's decision? Have you filed for an emergency petition to keep the pipeline in service?
A: Alan Armstrong, President, Chief Executive Officer, Director: Yes, gas is flowing. Lane Wilson, General Counsel: We will seek a temporary certificate and defend the FERC certificate. We anticipate no concerns about continuing operations.
Q: What are the current thoughts on producer production expectations over the balance of the year and into 2025?
A: Micheal Dunn, Chief Operating Officer, Executive Vice President: We feel good about our current forecast. Producers are making month-to-month decisions on gas volumes. We have over 1 Bcf of delayed TILs and ducts ready to flow when prices improve. Rich basins are outperforming, and we are comfortable with our end-of-year forecast.
Q: Can you update us on the Louisiana Energy Gateway (LEG) project following FERC's request for more information?
A: Chad Zamarin, Senior Vice President - Corporate Strategic Development: We have responded to the FERC data request and anticipate that FERC will either dismiss the matter or find LEG as a gathering system. We are confident in our current construction progress.
Q: Can you talk about the continued upside in the Gulf of Mexico, especially with the 2 to 0 CapEx tiebacks?
A: Alan Armstrong, President, Chief Executive Officer, Director: We have significant projects like Shell's Whale and Chevron's Ballymore coming online with no capital required on our part. Producers are focusing on reserves around existing infrastructure, leading to high incremental returns for us.
Q: What are your thoughts on current storage rates and expansion opportunities?
A: Chad Zamarin, Senior Vice President - Corporate Strategic Development: We've seen attractive recontracting rates exceeding expectations. We are approaching rates that justify both brownfield and greenfield expansions. Storage value is increasing, and we expect to reach expansion economics soon.
Q: Can you provide insight into the progress on filing new rates for Transco and the likelihood of a settlement?
A: Micheal Dunn, Chief Operating Officer, Executive Vice President: We aim to file new rates at the end of the month and hope for a settlement. We've discussed modernization efforts with customers and anticipate a modernization tracker to smooth out future rate increases.
Q: How does the DC Circuit decision in REA and the Chevron deference case reversal impact your approach to permitting?
A: T. Lane Wilson, Senior Vice President, General Counsel: The Chevron deference case will likely force administrations to stick more closely to Congressional laws, reducing pendulum swings. The REA decision does not change our approach to permitting; we believe FERC's certificate is defensible.
Q: Can you talk about the Gillis West project and its efficiencies from a capital and permitting perspective?
A: Alan Armstrong, President, Chief Executive Officer, Director: The project allows CenterPoint access to more reliable gas supplies from Louisiana, reducing dependence on volatile Texas intrastate markets. It requires minimal capital, primarily for an interconnect, and provides significant benefits.
Q: What are your latest thoughts on the regulatory environment as we approach the election season?
A: Alan Armstrong, President, Chief Executive Officer, Director: Tax impacts are a primary concern. Legislative outcomes are more critical for permitting reform. The Supreme Court's review of the NEPA process could lead to meaningful permitting reform, reducing arbitrary project stoppages.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
