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NYSE: WMB
Date: | Aug. 6, 2009 |
Williams Reports Second-Quarter 2009 Financial Results
• | Net Income is $142 Million, $0.24 Per Share for 2Q | ||
• | Recurring Adjusted Income is $116 Million, $0.20 Per Share for 2Q | ||
• | Recession, Lower Energy Commodity Prices Impact 2009 Results | ||
• | 2009 Recurring Adjusted EPS Guidance Range Updated to $0.70 — $0.90 | ||
• | Company Executing on 2009 Expansions, Growth Opportunities |
Quarterly Summary Financial Information | 2Q 2009 | 2Q 2008 | |||||||||||||||
Per share amounts are reported on a fully diluted basis. All | millions | per share | millions | per share | |||||||||||||
amounts are attributable to The Williams Companies, Inc. | |||||||||||||||||
Income from continuing operations | $ | 123 | $ | 0.21 | $ | 412 | $ | 0.69 | |||||||||
Income from discontinued operations | 19 | 0.03 | 25 | 0.04 | |||||||||||||
Net income | $ | 142 | $ | 0.24 | $ | 437 | $ | 0.73 | |||||||||
Recurring income from continuing operations* | $ | 120 | $ | 0.20 | $ | 390 | $ | 0.66 | |||||||||
After-tax mark-to-market adjustments | (4 | ) | — | 9 | $ | 0.01 | |||||||||||
Recurring income from continuing operations — after mark-to-market adjustments* | $ | 116 | $ | 0.20 | $ | 399 | $ | 0.67 | |||||||||
Year-to-Date Summary Financial Information | YTD 2009 | YTD 2008 | |||||||||||||||
Per share amounts are reported on a fully diluted basis. All | millions | per share | millions | per share | |||||||||||||
amounts are attributable to The Williams Companies, Inc. | |||||||||||||||||
Income from continuing operations | $ | 125 | $ | 0.21 | $ | 823 | $ | 1.38 | |||||||||
Income (loss) from discontinued operations | (155 | ) | (0.26 | ) | 114 | 0.19 | |||||||||||
Net income (loss) | ($30 | ) | ($0.05 | ) | $ | 937 | $ | 1.57 | |||||||||
Recurring income from continuing operations* | $ | 226 | $ | 0.39 | $ | 728 | $ | 1.22 | |||||||||
After-tax mark-to-market adjustments | 18 | 0.03 | 7 | $ | 0.01 | ||||||||||||
Recurring income from continuing operations — after mark-to-market adjustments* | $ | 244 | $ | 0.42 | $ | 735 | $ | 1.23 | |||||||||
* | A schedule reconciling income from continuing operations to recurring income from continuing operations and mark-to-market adjustments (non-GAAP measures) is available at www.williams.com and as an attachment to this press release. |
TULSA, Okla. — Williams (NYSE:WMB) announced unaudited net income attributable to Williams, for second-quarter 2009 of $142 million, or $0.24 per share on a diluted basis, compared with net income of $437 million, or $0.73 per share on a diluted basis for second-quarter 2008.
Sharply lower energy commodity prices in second-quarter 2009, compared to the record-high prices in second-quarter 2008, impacted results in Exploration & Production and Midstream, as both businesses’ results were significantly lower than second-quarter 2008.
Gas Pipeline’s results, as expected, were relatively steady despite the much lower commodity prices. Other factors that served to mitigate the effect of lower commodity prices include higher natural gas production; Exploration & Production’s hedge positions, which cover a significant portion of its production; and fee-based revenues from certain of Midstream’s gathering and processing services.
Year-to-date through June 30, Williams reported a net loss attributable to Williams of $30 million, or $0.05 per share on a diluted basis, compared with net income of $937 million, or $1.57 per share, for the first two quarters of 2008.
As a result of the Venezuelan government’s expropriation of the El Furrial and PIGAP II compression facilities in May, Williams is now reporting the results of those operations in discontinued operations. All year-to-date and prior-period comparisons in this news release reflect this change.
The year-to-date loss from discontinued operations is primarily due to the charges associated with these facilities that were recorded in first-quarter 2009. The company’s investment in Accroven, which was fully impaired during the first-quarter 2009, continues to be reported in the Midstream segment, as the assets have not been expropriated. Accroven owns gas processing facilities and an NGL fractionation plant in Venezuela.
In addition to the losses associated with the Venezuelan operations and investments, the previously noted lower energy commodity prices compared with the record-high prices in 2008 also negatively affected the year-
Williams (NYSE: WMB) Second-Quarter 2009 Financial Results — Aug. 6, 2009 | Page 1 of 7 |
to-date 2009 results. The first half of 2008 also benefited from $148 million in pre-tax gains on the sale of certain international interests.
Recurring Results Adjusted for Effect of Mark-to-Market Accounting
Recurring income from continuing operations, after adjustments to remove the effect of mark-to-market accounting for certain hedges and other derivatives in Gas Marketing Services, was $116 million, or $0.20 per share for second-quarter 2009. On the same adjusted basis, recurring income from continuing operations was $399 million, or $0.67 per share, for second-quarter 2008.
For the first half of 2009, recurring income from continuing operations after mark-to-market adjustments was $244 million, or $0.42 per share; compared with $735 million, or $1.23 per share, for the first half of 2008.
The lower recurring adjusted results for both the second-quarter and year-to-date periods were also due to the large disparity between the relatively low 2009 commodity prices compared with the record-high 2008 prices.
The relatively steady results in Gas Pipeline, as well as higher natural gas production, Exploration & Production’s hedge positions and fee-based revenues in Midstream, partially offset some of the negative effect of lower commodity prices.
A reconciliation of the company’s income from continuing operations to recurring income from continuing operations and mark-to-market adjustments is available at www.williams.com and as an attachment to this news release.
2009 Guidance Ranges Updated
Williams is updating its outlook for full-year 2009 commodity price assumptions and its earnings and capital expenditures. The following chart shows the actual year-to-date results for commodity prices, earnings and capital expenditures, as well as the company’s expectation for these ranges in the second-half and full-year of 2009. For comparison, it also shows actual full-year 2008 results for the same categories.
YTD 2009 | Outlook as of 8-6-09 | 2008 | ||||||||||||
Actuals | 3Q/4Q 2009 | Full 2009 | Actuals | |||||||||||
Natural Gas ($/MMBtu) | ||||||||||||||
NYMEX | $ | 4.19 | $3.41 - $5.11 | $3.80 - $4.65 | $ | 9.03 | ||||||||
Rockies | $ | 2.83 | $2.67 - $4.07 | $2.75 - $3.45 | $ | 6.21 | ||||||||
San Juan/Mid-Continent Avg. | $ | 3.03 | $2.97 - $4.37 | $3.00 - $3.70 | $ | 7.17 | ||||||||
Crude Oil — WTI ($/barrel) | $ | 44.80 | $55.20 - $75.20 | $50 - $60 | $ | 104.34 | ||||||||
Crude-to-Natural Gas Ratio | 10.7x | 14.7x - 16.2x | 12.9x - 13.2x | 11.6x | ||||||||||
Average NGL Margins ($/gallon) | $ | 0.27 | $0.28 - $0.46 | $0.28 - $0.37 | $ | 0.61 | ||||||||
Capital Expenditures Incurred* | $ | 1,033 | $1,192 - $1,442 | $2,225 - $2,475 | $ | 3,586 | ||||||||
Recurring Adj. Segment Profit* | $ | 821 | $654 - $979 | $1,475 - $1,800 | $ | 2,727 | ||||||||
Recurring Adj. Earnings Per Share* | $ | 0.42 | $0.28 - $0.48 | $0.70 - $0.90 | $ | 2.10 |
* | Capital Expenditures Incurred and Recurring Adjusted Segment Profit are in millions of dollars. Capital Expenditures Incurred includes increase in property, plant and equipment plus purchase of investments. Recurring Segment Profit and Earnings Per Share are adjusted to remove the effect of mark-to-market accounting. EPS is fully diluted. |
The company’s updated outlook for 2009 recurring consolidated segment profit and earnings per share reflects higher expected net realized natural gas prices and NGL margins. The company has raised the lower-end of its guidance range for Exploration & Production by $75 million and refined Midstream’s outlook by $50 million on both the lower- and upper-end of its guidance range. As a result, the company has also updated its recurring adjusted earnings per share guidance to a range of $0.70 to $0.90 for 2009.
The company has slightly reduced its expected capital expenditures for 2009, reflecting the company’s efforts to reduce operating and capital project costs.
CEO Perspective
Williams (NYSE: WMB) Second-Quarter 2009 Financial Results — Aug. 6, 2009 | Page 2 of 7 |
“This was a quarter in which our natural gas businesses performed as expected, as we were successful in reducing our operating and capital project costs and managing our liquidity,” said Steve Malcolm, chairman, president and chief executive officer. “As a result, we remain on-target to meet our goals in a challenging year.”
“We also continue to take advantage of ideal growth opportunities, such as our entry into the Marcellus Shale earlier this year, and to execute on important expansion projects, such as our new Willow Creek processing facility in the Piceance Basin.”
“All of these efforts make Williams well-positioned for the coming market recovery that will drive substantial value across all of our businesses,” Malcolm said.
Business Segment Performance
Consolidated Segment Profit (Loss) | 2Q | YTD | |||||||||||||||
Amounts in millions | 2009 | 2008 | 2009 | 2008 | |||||||||||||
Exploration & Production | $ | 119 | $ | 496 | $ | 197 | $ | 926 | |||||||||
Midstream Gas & Liquids | 137 | 270 | 149 | 508 | |||||||||||||
Gas Pipeline | 162 | 179 | 341 | 359 | |||||||||||||
$ | 418 | $ | 945 | $ | 687 | $ | 1,793 | ||||||||||
Gas Marketing Services | ($6 | ) | ($46 | ) | (8 | ) | (25 | ) | |||||||||
Other | 3 | (1 | ) | �� | 4 | — | |||||||||||
Consolidated Segment Profit (Loss) | $ | 415 | $ | 898 | $ | 683 | $ | 1,768 | |||||||||
Recurring Consolidated Segment Profit After | |||||||||||||||||
Mark-to-Market Adjustments* | 2Q | YTD | |||||||||||||||
Amounts in millions | 2009 | 2008 | 2009 | 2008 | |||||||||||||
Exploration & Production | $ | 120 | $ | 471 | $ | 237 | $ | 783 | |||||||||
Midstream Gas & Liquids | 137 | 268 | 218 | 506 | |||||||||||||
Gas Pipeline | 162 | 170 | 341 | 350 | |||||||||||||
$ | 419 | $ | 909 | $ | 796 | $ | 1,639 | ||||||||||
Gas Marketing after MTM Adjustments | ($13 | ) | ($31 | ) | 21 | (13 | ) | ||||||||||
Other | 3 | (1 | ) | 4 | — | ||||||||||||
Recurring Consolidated Segment Profit After Mark-to-Market Adjustments | $ | 409 | $ | 877 | $ | 821 | $ | 1,626 | |||||||||
* | A schedule reconciling income from continuing operations to recurring income from continuing operations and mark-to-market adjustments (non-GAAP measures) is available at www.williams.com and as an attachment to this press release. |
Exploration & Production
Exploration & Production includes natural gas production and development in the U.S. Rocky Mountains, San Juan Basin, Barnett Shale, and Marcellus Shale, and oil and gas development in South America.
The business reported segment profit of $119 million for second-quarter 2009, compared with segment profit of $496 million in second-quarter 2008.
The significant decline in segment profit during the second quarter was due to much lower net realized average prices for natural gas, partially offset by higher production volumes.
These higher production volumes, coupled with higher capital costs in prior years, resulted in higher depletion, depreciation and amortization expense during the second-quarter. Also, the 2008 period benefited from a $30 million pre-tax gain on the sale of certain international interests.
Although natural gas production grew from second-quarter 2008 to second-quarter 2009, production is expected to continue to decline somewhat throughout the remainder of 2009 because of the company’s reduced drilling activity. Average daily natural gas production on U.S. interests fell 4 percent from first-quarter 2009 to second-quarter 2009.
Average Daily Production | 2Q | |||||||||||
Amounts in million cubic feet equivalent of natural | 2009 | 2008 | Growth rate | |||||||||
gas (MMcfe) | ||||||||||||
Piceance Basin | 703 | 659 | 7 | % | ||||||||
Powder River Basin | 242 | 234 | 3 | % | ||||||||
Other Basins | 235 | 217 | 8 | % | ||||||||
U.S. Interests only | 1,180 | 1,110 | 6 | % | ||||||||
U.S. & International Interests | 1,233 | 1,159 | 6 | % |
During second-quarter 2009, Williams’ net realized average price for U.S. production was $3.95 per thousand cubic feet of natural gas equivalent (Mcfe), which was 51 percent lower than the $8.06 per Mcfe realized in second-quarter 2008.
For the first half of 2009, the exploration and production business reported a segment profit of $197 million, compared with $926 million for the first half of 2008.
Significantly lower net realized average price for natural gas was the primary driver of the lower segment profit in the first half of 2009. The first half of 2008 also benefited from $148 million in pre-tax gains on the sale of certain international interests. Also, the company recorded $34 million in expenses associated with the early
Williams (NYSE: WMB) Second-Quarter 2009 Financial Results — Aug. 6, 2009 | Page 3 of 7 |
termination of rig contracts in the first quarter 2009. These termination expenses were a result of reductions in 2009 drilling activities in the Piceance Basin.
Midstream Gas & Liquids
Midstream provides natural gas gathering and processing, deepwater production handling and oil transportation, natural gas liquids (NGL) fractionation and storage services and olefins production.
The business reported a segment profit of $137 million for second-quarter 2009, compared with segment profit of $270 million for second-quarter 2008.
The decline in segment profit for the quarter is primarily because of lower NGL and olefin prices and lower NGL equity sales volumes in the second quarter, partially offset by decreased production costs reflecting lower natural gas prices. While NGL margins in the second quarter of 2009 are still significantly lower than the 2008 margins, they have improved compared to first-quarter 2009 as natural gas prices declined and NGL prices, especially ethane, increased.
The lower NGL equity sales volumes for the quarter were primarily due to lower volumes in the West region because certain gas processing agreements with producers converted from keep-whole to fee-based processing at the beginning of 2009. Declines in production sources and hurricane-related impacts in the Gulf region, primarily in the Western Gulf of Mexico, also contributed to lower volumes.
For the first half of the year, Midstream’s segment profit was $149 million, compared with $508 million for the first half of 2008.
The significant decline, compared with the same period in 2008, is due primarily to the same factors that drove the reduction in segment profit for the second quarter. In addition, the year-to-date results were unfavorably impacted by a $75 million loss related to the impairment of Midstream’s equity investment in the Accroven assets in Venezuela.
In addition to the previously discussed factors that drove the reduction in NGL equity sales volumes in the second quarter, year-to-date 2009 volumes were also unfavorably impacted by periods of reduced NGL recoveries in the first quarter, primarily in the Gulf Coast region. The reduced NGL recoveries were due to unfavorable NGL economics. Offsetting these reductions, NGL equity volumes reflect a favorable impact related to an increase in inventory in the first-quarter 2008. The increase in inventory was the result of the company transitioning from selling volumes for certain plants in the West at the tailgate of the plant to shipping volumes through a third-party pipeline for sale downstream.
Gas Pipeline
Gas Pipeline, which primarily delivers natural gas to markets along the Eastern Seaboard, in Florida and in the Pacific Northwest, reported second-quarter 2009 segment profit of $162 million, compared with $179 million for second-quarter 2008.
Williams (NYSE: WMB) Second-Quarter 2009 Financial Results — Aug. 6, 2009 | Page 4 of 7 |
During second-quarter 2009, Gas Pipeline experienced higher operating costs, partly offset by increased revenues from the Sentinel expansion, which was placed in service in December 2008.
The higher costs resulted primarily from higher depreciation, operational and maintenance, and pension expenses partially offset by lower project development costs. Also, the second-quarter 2008 results included the benefit of a $9 million gain on sale of excess natural gas inventory.
Year-to-date through June 30, Gas Pipeline reported segment profit of $341 million, compared with $359 million for the same period in 2008.
The lower segment profit was due primarily to the higher operating costs partially offset by the higher revenues explained above and increased year-to-date earnings from the company’s 50-percent interest in Gulfstream Natural Gas Systems. The year-to-date 2008 results also included the previously noted benefit of the second-quarter gain on the sale of excess gas inventory.
Gas Marketing Services
Gas Marketing Services is responsible for supporting Williams’ natural gas businesses by providing marketing and risk management services. These services primarily include marketing and hedging the gas produced by Exploration & Production, and procuring fuel and shrink gas and hedging NGLs for Midstream.
In addition, Gas Marketing manages various natural gas related contracts, such as transportation, storage, and related hedges. It also provides marketing services to third-parties, such as producers and processing companies. The segment also manages certain legacy natural gas contracts and positions that previously were reported in the former power business, which have been reduced to a minimal level.
Gas Marketing Recurring Segment Profit | |||||||||||||||||
Adjusted for Mark-to-Market Effect* | 2Q | YTD | |||||||||||||||
Amounts in millions | 2009 | 2008 | 2009 | 2008 | |||||||||||||
Segment loss | ($6 | ) | ($46 | ) | ($8 | ) | ($25 | ) | |||||||||
Nonrecurring adjustments | — | — | — | — | |||||||||||||
Recurring segment loss | ($6 | ) | ($46 | ) | ($8 | ) | ($25 | ) | |||||||||
Mark-to-market adjustments | (7 | ) | 15 | 29 | 12 | ||||||||||||
Recurring segment profit (loss) after MTM adjustments | ($13 | ) | ($31 | ) | $ | 21 | ($13 | ) | |||||||||
* | A schedule reconciling income from continuing operations to recurring income from continuing operations and mark-to-market adjustments (non-GAAP measures) is available at www.williams.com and as an attachment to this press release. |
The improvement in Gas Marketing’s second-quarter recurring segment loss after mark-to-market adjustments primarily resulted from the absence of a 2008 $8 million inventory valuation adjustment related to natural gas owned in storage and a $7 million improvement in margins from buying and selling gas around transportation contracts, as well as margins realized on physical gas purchases.
The improvement in Gas Marketing’s year-to-date recurring adjusted results was primarily the result of a $13 million decrease in realized losses associated with certain legacy positions and $15 million improvement in realized natural gas margins around daily and monthly asset optimization.
Although not significant for the second-quarter 2009 results, the company expects in the future to have some level of mark-to-market volatility in Gas Marketing Services, primarily from natural gas storage hedging.
Williams’ Liquidity, Financial Strength Remain Strong
As of July 31, 2009, Williams had approximately $1.87 billion of cash and cash equivalents, which included approximately $607 million held by certain domestic and international subsidiaries or margin deposits held on behalf of counterparties. The company also had approximately $1.87 billion of available credit capacity under the company’s credit facilities. Williams’ total liquidity as of July 31 was approximately $3.74 billion.
Williams (NYSE: WMB) Second-Quarter 2009 Financial Results — Aug. 6, 2009 | Page 5 of 7 |
Williams has no significant debt maturities until 2011 and the company’s $1.43 billion primary credit facility does not expire until May 2012. Williams is rated investment grade by three of the major rating agencies.
Today’s Analyst Call
Management will discuss the second-quarter 2009 results and outlook for 2009 during a live webcast beginning at 9:30 a.m. EDT today. Participants are encouraged to access the webcast and corresponding slides for viewing, downloading and printing at www.williams.com.
A limited number of phone lines also will be available at (877) 874-1565. International callers should dial (719) 325-4836. Replays of the second-quarter webcast, in both streaming and downloadable podcast formats, will be available for two weeks at www.williams.com following the event.
Form 10-Q
The company plans to file its Form 10-Q with the Securities and Exchange Commission today. The document will be available on both the SEC and Williams websites.
About Williams (NYSE: WMB)
Williams, through its subsidiaries, finds, produces, gathers, processes and transports natural gas. Williams’ operations are concentrated in the Pacific Northwest, Rocky Mountains, Gulf Coast, and Eastern Seaboard. More information is available at http://www.williams.com. Go tohttp://www.b2i.us/irpass.asp?BzID=630&to=ea&s=0 to join our e-mail list.
Contact: | Jeff Pounds | |
Williams (media relations) | ||
(918) 573-3332 | ||
Travis Campbell | ||
Williams (investor relations) | ||
(918) 573-2944 | ||
Richard George | ||
Williams (investor relations) | ||
(918) 573-3679 | ||
Sharna Reingold | ||
Williams (investor relations) | ||
(918) 573-2078 |
Our reports, filings, and other public announcements may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You typically can identify forward-looking statements by the use of forward-looking words, such as “anticipates,” believes,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “objectives,” “planned,” “potential,” “projects,” “scheduled,” “will,” or other similar words. These statements are based on our present intentions and our assumptions about future events and are subject to risks, uncertainties, and other factors. In addition to any assumptions, risks, uncertainties or other factors referred to specifically in connection with such statements, other factors not specifically referenced could cause our actual results to differ materially from the results expressed or implied in any forward-looking statements. Those factors include, among others:
• | availability of supplies (including the uncertainties inherent in assessing, estimating, acquiring and developing future natural gas reserves), market demand, volatility of prices, and the availability and cost of capital; |
Williams (NYSE: WMB) Second-Quarter 2009 Financial Results — Aug. 6, 2009 | Page 6 of 7 |
• | inflation, interest rates, fluctuation in foreign exchange, and general economic conditions (including the current economic slowdown and the disruption of global credit markets and the impact of these events on our customers and suppliers); | ||
• | the strength and financial resources of our competitors; | ||
• | development of alternative energy sources; | ||
• | the impact of operational and development hazards; | ||
• | costs of, changes in, or the results of laws, government regulations (including proposed climate change legislation), environmental liabilities, litigation, and rate proceedings; | ||
• | our costs and funding obligations for defined benefit pension plans and other postretirement benefit plans; | ||
• | changes in maintenance and construction costs; | ||
• | changes in the current geopolitical situation; | ||
• | our exposure to the credit risk of our customers; | ||
• | risks related to strategy and financing, including restrictions stemming from our debt agreements, future changes in our credit ratings and the availability and cost of credit; | ||
• | risks associated with future weather conditions; | ||
• | acts of terrorism, and | ||
• | additional risks described in our filings with the Securities and Exchange Commission. |
Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. In addition to causing our actual results to differ, the factors listed above may cause our intentions to change. Such changes in our intentions may also cause our results to differ. We disclaim any obligation to and do not intend to publicly update or revise any forward-looking statements or changes to our intentions, whether as a result of new information, future events or otherwise.
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Williams (NYSE: WMB) Second-Quarter 2009 Financial Results — Aug. 6, 2009 | Page 7 of 7 |
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Financial Highlights and Operating Statistics
(UNAUDITED)
Final
June 30, 2009
Reconciliation of Income from Continuing Operations Attributable to The Williams Companies, Inc. to Recurring Earnings
(UNAUDITED)
(UNAUDITED)
2008 | 2009 | |||||||||||||||||||||||||||||||
(Dollars in millions, except per-share amounts) | 1st Qtr * | 2nd Qtr * | 3rd Qtr * | 4th Qtr * | Year * | 1st Qtr * | 2nd Qtr | Year | ||||||||||||||||||||||||
Income from continuing operations attributable to The Williams Companies, Inc. available to common stockholders | $ | 411 | $ | 412 | $ | 360 | $ | 123 | $ | 1,306 | $ | 2 | $ | 123 | $ | 125 | ||||||||||||||||
Income from continuing operations — diluted earnings per common share | $ | 0.69 | $ | 0.69 | $ | 0.61 | $ | 0.21 | $ | 2.21 | $ | — | $ | 0.21 | $ | 0.21 | ||||||||||||||||
Nonrecurring items: | ||||||||||||||||||||||||||||||||
Exploration & Production (E&P) | ||||||||||||||||||||||||||||||||
Gain on sale of Peru interests | $ | (118 | ) | $ | (30 | ) | $ | — | $ | — | $ | (148 | ) | $ | — | $ | — | $ | — | |||||||||||||
Reserve for receivables from bankrupt counterparty | — | 5 | 4 | — | 9 | — | — | — | ||||||||||||||||||||||||
Impairments of property in the Arkoma basin | — | — | 14 | 129 | 143 | 5 | — | 5 | ||||||||||||||||||||||||
Accrual for Wyoming severance taxes | — | — | — | 34 | 34 | — | 3 | 3 | ||||||||||||||||||||||||
Penalties from early release of drilling rigs | — | — | — | — | — | 34 | (2 | ) | 32 | |||||||||||||||||||||||
Total Exploration & Production nonrecurring items | (118 | ) | (25 | ) | 18 | 163 | 38 | 39 | 1 | 40 | ||||||||||||||||||||||
Gas Pipeline | ||||||||||||||||||||||||||||||||
Gain on sale of excess inventory gas — TGPL | — | (9 | ) | — | — | (9 | ) | — | — | — | ||||||||||||||||||||||
Gain on sale of certain south Texas assets — TGPL | — | — | (10 | ) | — | (10 | ) | — | — | — | ||||||||||||||||||||||
Total Gas Pipeline nonrecurring items | — | (9 | ) | (10 | ) | — | (19 | ) | — | — | — | |||||||||||||||||||||
Midstream Gas & Liquids (MGL) | ||||||||||||||||||||||||||||||||
Impairment of Carbonate Trend pipeline | — | — | — | 6 | 6 | — | — | — | ||||||||||||||||||||||||
Involuntary conversion gain related to Ignacio gas processing plant | — | (3 | ) | (6 | ) | (3 | ) | (12 | ) | 1 | — | 1 | ||||||||||||||||||||
Reserve for receivables from bankrupt counterparty | — | 1 | — | — | 1 | — | — | — | ||||||||||||||||||||||||
Final earnout payment from 2005 Gulf Liquids asset sale | — | — | (8 | ) | — | (8 | ) | — | — | — | ||||||||||||||||||||||
Charges from Hurricanes Gustav & Ike | — | — | 8 | 5 | 13 | — | — | — | ||||||||||||||||||||||||
Involuntary conversion gain from hurricane damage at Cameron | — | — | — | (5 | ) | (5 | ) | — | — | — | ||||||||||||||||||||||
Gulf Liquids litigation partial settlement | — | — | — | (32 | ) | (32 | ) | — | — | — | ||||||||||||||||||||||
Loss from Venezuela investment | — | — | — | — | — | 68 | — | 68 | ||||||||||||||||||||||||
Total Midstream Gas & Liquids nonrecurring items | — | (2 | ) | (6 | ) | (29 | ) | (37 | ) | 69 | — | 69 | ||||||||||||||||||||
Nonrecurring items included in segment profit (loss) | (118 | ) | (36 | ) | 2 | 134 | (18 | ) | 108 | 1 | 109 | |||||||||||||||||||||
Nonrecurring items below segment profit (loss) | ||||||||||||||||||||||||||||||||
Interest related to Gulf Liquids litigation partial settlement — MGL | — | — | — | (11 | ) | (11 | ) | — | — | — | ||||||||||||||||||||||
Interest related to Wyoming severance taxes — E&P | — | — | — | 4 | 4 | — | — | — | ||||||||||||||||||||||||
Loss associated with Venezuela investment — E&P | — | — | — | — | — | 11 | — | 11 | ||||||||||||||||||||||||
Reversal of litigation contingency — Corporate | — | — | — | — | — | — | (5 | ) | (5 | ) | ||||||||||||||||||||||
— | — | — | (7 | ) | (7 | ) | 11 | (5 | ) | 6 | ||||||||||||||||||||||
Total nonrecurring items | (118 | ) | (36 | ) | 2 | 127 | (25 | ) | 119 | (4 | ) | 115 | ||||||||||||||||||||
Tax effect for above items | (45 | ) | (14 | ) | 1 | 49 | (9 | ) | 15 | (1 | ) | 14 | ||||||||||||||||||||
Recurring income from continuing operations available to common stockholders | $ | 338 | $ | 390 | $ | 361 | $ | 201 | $ | 1,290 | $ | 106 | $ | 120 | $ | 226 | ||||||||||||||||
Recurring diluted earnings per common share | $ | 0.57 | $ | 0.66 | $ | 0.61 | $ | 0.34 | $ | 2.18 | $ | 0.18 | $ | 0.20 | $ | 0.39 | ||||||||||||||||
Weighted-average shares — diluted (thousands) | 598,627 | 596,187 | 589,138 | 587,057 | 592,719 | 582,361 | 588,780 | 587,999 |
Note: | The sum of earnings per share for the quarters may not equal the total earnings per share for the year due to changes in the weighted-average number of common shares outstanding. |
* | Amounts have been recast to reflect certain Venezuela operations as discontinued operations. |
Consolidated Statement of Operations
(UNAUDITED)
(UNAUDITED)
2008 | 2009 | |||||||||||||||||||||||||||||||
(Dollars in millions, except per-share amounts) | 1st Qtr * | 2nd Qtr * | 3rd Qtr * | 4th Qtr * | Year * | 1st Qtr * | 2nd Qtr | Year | ||||||||||||||||||||||||
Revenues | $ | 3,164 | $ | 3,657 | $ | 3,201 | $ | 2,163 | $ | 12,185 | $ | 1,922 | $ | 1,909 | $ | 3,831 | ||||||||||||||||
Segment costs and expenses: | ||||||||||||||||||||||||||||||||
Costs and operating expenses | 2,333 | 2,697 | 2,344 | 1,697 | 9,071 | 1,444 | 1,392 | 2,836 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 111 | 131 | 133 | 129 | 504 | 125 | 129 | 254 | ||||||||||||||||||||||||
Other (income) expense — net | (114 | ) | (32 | ) | 1 | 73 | (72 | ) | 33 | (1 | ) | 32 | ||||||||||||||||||||
Total segment costs and expenses | 2,330 | 2,796 | 2,478 | 1,899 | 9,503 | 1,602 | 1,520 | 3,122 | ||||||||||||||||||||||||
Equity earnings | 36 | 37 | 54 | 10 | 137 | 23 | 26 | 49 | ||||||||||||||||||||||||
Income (loss) from investments | — | — | — | 1 | 1 | (75 | ) | — | (75 | ) | ||||||||||||||||||||||
Total segment profit | 870 | 898 | 777 | 275 | 2,820 | 268 | 415 | 683 | ||||||||||||||||||||||||
Reclass equity earnings | (36 | ) | (37 | ) | (54 | ) | (10 | ) | (137 | ) | (23 | ) | (26 | ) | (49 | ) | ||||||||||||||||
Reclass (income) loss from investments | — | — | — | (1 | ) | (1 | ) | 75 | — | 75 | ||||||||||||||||||||||
General corporate expenses | (42 | ) | (42 | ) | (34 | ) | (31 | ) | (149 | ) | (40 | ) | (38 | ) | (78 | ) | ||||||||||||||||
Operating income | 792 | 819 | 689 | 233 | 2,533 | 280 | 351 | 631 | ||||||||||||||||||||||||
Interest accrued | (160 | ) | (161 | ) | (162 | ) | (153 | ) | (636 | ) | (162 | ) | (167 | ) | (329 | ) | ||||||||||||||||
Interest capitalized | 8 | 16 | 16 | 19 | 59 | 20 | 22 | 42 | ||||||||||||||||||||||||
Investing income (loss) | 55 | 54 | 65 | 15 | 189 | (61 | ) | 24 | (37 | ) | ||||||||||||||||||||||
Other income (expense) — net | 4 | — | 2 | (7 | ) | (1 | ) | (2 | ) | 1 | (1 | ) | ||||||||||||||||||||
Income from continuing operations before income taxes | 699 | 728 | 610 | 107 | 2,144 | 75 | 231 | 306 | ||||||||||||||||||||||||
Provision (benefit) for income taxes | 251 | 257 | 199 | (30 | ) | 677 | 56 | 80 | 136 | |||||||||||||||||||||||
Income from continuing operations | 448 | 471 | 411 | 137 | 1,467 | 19 | 151 | 170 | ||||||||||||||||||||||||
Income (loss) from discontinued operations | 91 | 29 | 10 | (5 | ) | 125 | (243 | ) | 18 | (225 | ) | |||||||||||||||||||||
Net income (loss) | $ | 539 | $ | 500 | $ | 421 | $ | 132 | $ | 1,592 | $ | (224 | ) | $ | 169 | $ | (55 | ) | ||||||||||||||
Less: Net income (loss) attributable to noncontrolling interests | 39 | 63 | 55 | 17 | 174 | (52 | ) | 27 | (25 | ) | ||||||||||||||||||||||
Net income (loss) attributable to The Williams Companies, Inc. | $ | 500 | $ | 437 | $ | 366 | $ | 115 | $ | 1,418 | $ | (172 | ) | $ | 142 | $ | (30 | ) | ||||||||||||||
Amounts attributable to The Williams Companies, Inc.: | ||||||||||||||||||||||||||||||||
Income from continuing operations | $ | 411 | $ | 412 | $ | 360 | $ | 123 | $ | 1,306 | $ | 2 | $ | 123 | 125 | |||||||||||||||||
Income (loss) from discontinued operations | 89 | 25 | 6 | (8 | ) | 112 | (174 | ) | 19 | (155 | ) | |||||||||||||||||||||
Net income (loss) | $ | 500 | $ | 437 | $ | 366 | $ | 115 | $ | 1,418 | $ | (172 | ) | $ | 142 | $ | (30 | ) | ||||||||||||||
Diluted earnings (loss) per common share: | ||||||||||||||||||||||||||||||||
Income from continuing operations | $ | 0.69 | $ | 0.69 | $ | 0.61 | $ | 0.21 | $ | 2.21 | $ | — | $ | 0.21 | $ | 0.21 | ||||||||||||||||
Income (loss) from discontinued operations | 0.15 | 0.04 | 0.01 | (0.01 | ) | 0.19 | (0.29 | ) | 0.03 | (0.26 | ) | |||||||||||||||||||||
Net income (loss) | $ | 0.84 | $ | 0.73 | $ | 0.62 | $ | 0.20 | $ | 2.40 | $ | (0.29 | ) | $ | 0.24 | $ | (0.05 | ) | ||||||||||||||
Weighted-average number of shares used in computation (thousands) | 598,627 | 596,187 | 589,138 | 587,057 | 592,719 | 582,361 | 588,780 | 587,999 | ||||||||||||||||||||||||
Common shares outstanding at end of period (thousands) | 584,025 | 579,117 | 578,641 | 579,052 | 579,052 | 580,072 | 582,933 | 582,933 | ||||||||||||||||||||||||
Market price per common share (end of period) | $ | 32.98 | $ | 40.31 | $ | 23.65 | $ | 14.48 | $ | 14.48 | $ | 11.38 | $ | 15.61 | $ | 15.61 | ||||||||||||||||
Common dividends per share | $ | 0.10 | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.43 | $ | 0.11 | $ | 0.11 | $ | 0.22 |
Note: | The sum of earnings (loss) per share for the quarters may not equal the total earnings (loss) per share for the year due to changes in the weighted-average number of common shares outstanding. |
* | Amounts have been recast to reflect certain Venezuela operations as discontinued operations. |
2
Reconciliation of Segment Profit (Loss) to Recurring Segment Profit (Loss)
(UNAUDITED)
(UNAUDITED)
2008 | 2009 | |||||||||||||||||||||||||||||||
(Dollars in millions) | 1st Qtr * | 2nd Qtr * | 3rd Qtr * | 4th Qtr * | Year * | 1st Qtr * | 2nd Qtr | Year | ||||||||||||||||||||||||
Segment profit (loss): | ||||||||||||||||||||||||||||||||
Exploration & Production | $ | 430 | $ | 496 | $ | 361 | $ | (27 | ) | $ | 1,260 | $ | 78 | $ | 119 | $ | 197 | |||||||||||||||
Gas Pipeline | 180 | 179 | 173 | 157 | 689 | 179 | 162 | 341 | ||||||||||||||||||||||||
Midstream Gas & Liquids | 238 | 270 | 229 | 134 | 871 | 12 | 137 | 149 | ||||||||||||||||||||||||
Gas Marketing Services | 21 | (46 | ) | 16 | 12 | 3 | (2 | ) | (6 | ) | (8 | ) | ||||||||||||||||||||
Other | 1 | (1 | ) | (2 | ) | (1 | ) | (3 | ) | 1 | 3 | 4 | ||||||||||||||||||||
Total segment profit | $ | 870 | $ | 898 | $ | 777 | $ | 275 | $ | 2,820 | $ | 268 | $ | 415 | $ | 683 | ||||||||||||||||
Nonrecurring adjustments: | ||||||||||||||||||||||||||||||||
Exploration & Production | $ | (118 | ) | $ | (25 | ) | $ | 18 | $ | 163 | $ | 38 | $ | 39 | $ | 1 | $ | 40 | ||||||||||||||
Gas Pipeline | — | (9 | ) | (10 | ) | — | (19 | ) | — | — | — | |||||||||||||||||||||
Midstream Gas & Liquids | — | (2 | ) | (6 | ) | (29 | ) | (37 | ) | 69 | — | 69 | ||||||||||||||||||||
Gas Marketing Services | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total segment nonrecurring adjustments | $ | (118 | ) | $ | (36 | ) | $ | 2 | $ | 134 | $ | (18 | ) | $ | 108 | $ | 1 | $ | 109 | |||||||||||||
Recurring segment profit (loss): | ||||||||||||||||||||||||||||||||
Exploration & Production | $ | 312 | $ | 471 | $ | 379 | $ | 136 | $ | 1,298 | $ | 117 | $ | 120 | $ | 237 | ||||||||||||||||
Gas Pipeline | 180 | 170 | 163 | 157 | 670 | 179 | 162 | 341 | ||||||||||||||||||||||||
Midstream Gas & Liquids | 238 | 268 | 223 | 105 | 834 | 81 | 137 | 218 | ||||||||||||||||||||||||
Gas Marketing Services | 21 | (46 | ) | 16 | 12 | 3 | (2 | ) | (6 | ) | (8 | ) | ||||||||||||||||||||
Other | 1 | (1 | ) | (2 | ) | (1 | ) | (3 | ) | 1 | 3 | 4 | ||||||||||||||||||||
Total recurring segment profit | $ | 752 | $ | 862 | $ | 779 | $ | 409 | $ | 2,802 | $ | 376 | $ | 416 | $ | 792 | ||||||||||||||||
Note: | Segment profit (loss) includes equity earnings and income (loss) from investments reported in investing income (loss) in the Consolidated Statement of Operations. Equity earnings results from investments accounted for under the equity method. Income (loss) from investments results from the management of certain equity investments. |
* | Amounts have been recast to reflect certain Venezuela operations as discontinued operations. |
3
Exploration & Production
(UNAUDITED)
(UNAUDITED)
2008 | 2009 | |||||||||||||||||||||||||||||||
(Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr | 2nd Qtr | Year | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Production | $ | 617 | $ | 826 | $ | 715 | $ | 486 | $ | 2,644 | $ | 479 | $ | 440 | $ | 919 | ||||||||||||||||
Gas management | 86 | 106 | 95 | 68 | 355 | 48 | 48 | 96 | ||||||||||||||||||||||||
Hedge ineffectiveness and forward mark-to-market gains (losses) | (2 | ) | (14 | ) | 18 | (1 | ) | 1 | (2 | ) | (1 | ) | (3 | ) | ||||||||||||||||||
International | 17 | 19 | 18 | 18 | 72 | 17 | 18 | 35 | ||||||||||||||||||||||||
Other | 10 | 11 | 15 | 13 | 49 | 11 | 25 | 36 | ||||||||||||||||||||||||
Total revenues | 728 | 948 | 861 | 584 | 3,121 | 553 | 530 | 1,083 | ||||||||||||||||||||||||
Segment costs and expenses: | ||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization (including International) | 166 | 182 | 187 | 202 | 737 | 219 | 217 | 436 | ||||||||||||||||||||||||
Lease and other operating expenses | 60 | 61 | 72 | 73 | 266 | 71 | 62 | 133 | ||||||||||||||||||||||||
Operating taxes | 49 | 69 | 65 | 56 | 239 | 28 | 3 | 31 | ||||||||||||||||||||||||
Exploration expense | 2 | 1 | 3 | 21 | 27 | 12 | 21 | 33 | ||||||||||||||||||||||||
Third party gathering expense | 10 | 13 | 12 | 15 | 50 | 15 | 17 | 32 | ||||||||||||||||||||||||
Selling, general and administrative expenses (including International) | 37 | 44 | 49 | 46 | 176 | 43 | 42 | 85 | ||||||||||||||||||||||||
Gas management expenses | 84 | 105 | 94 | 65 | 348 | 47 | 43 | 90 | ||||||||||||||||||||||||
International (excluding DD&A and SG&A) | 6 | 10 | 9 | 11 | 36 | 7 | 6 | 13 | ||||||||||||||||||||||||
Other (income) expense — net | (113 | ) | (27 | ) | 14 | 128 | 2 | 37 | 4 | 41 | ||||||||||||||||||||||
Total segment costs and expenses | 301 | 458 | 505 | 617 | 1,881 | 479 | 415 | 894 | ||||||||||||||||||||||||
Equity earnings | 3 | 6 | 5 | 6 | 20 | 4 | 4 | 8 | ||||||||||||||||||||||||
Reported segment profit | 430 | 496 | 361 | (27 | ) | 1,260 | 78 | 119 | 197 | |||||||||||||||||||||||
Nonrecurring adjustments | (118 | ) | (25 | ) | 18 | 163 | 38 | 39 | 1 | 40 | ||||||||||||||||||||||
Recurring segment profit | $ | 312 | $ | 471 | $ | 379 | $ | 136 | $ | 1,298 | $ | 117 | $ | 120 | $ | 237 | ||||||||||||||||
Operating statistics | ||||||||||||||||||||||||||||||||
Domestic: | ||||||||||||||||||||||||||||||||
Total domestic net volumes (Bcfe) | 92.2 | 101.0 | 100.8 | 106.4 | 400.4 | 110.3 | 107.3 | 217.6 | ||||||||||||||||||||||||
Net domestic volumes per day (MMcfe/d) | 1,013 | 1,110 | 1,096 | 1,156 | 1,094 | 1,225 | 1,180 | 1,202 | ||||||||||||||||||||||||
Net domestic realized price ($/Mcfe) (1) | $ | 6.580 | $ | 8.056 | $ | 6.971 | $ | 4.428 | $ | 6.479 | $ | 4.205 | $ | 3.949 | $ | 4.079 | ||||||||||||||||
Production taxes per Mcfe | $ | 0.529 | $ | 0.683 | $ | 0.648 | $ | 0.525 | $ | 0.597 | $ | 0.254 | $ | 0.024 | $ | 0.141 | ||||||||||||||||
Lease and other operating expense per Mcfe | $ | 0.653 | $ | 0.606 | $ | 0.712 | $ | 0.685 | $ | 0.664 | $ | 0.649 | $ | 0.576 | $ | 0.613 | ||||||||||||||||
(1) Net realized price is calculated the following way:production revenues(including hedging activities and incremental margins related to gas management activities) lessthird party gathering expensedivided by net volumes. | ||||||||||||||||||||||||||||||||
International: | ||||||||||||||||||||||||||||||||
Total volumes including Equity Investee (Bcfe) | 5.7 | 5.7 | 5.9 | 6.0 | 23.3 | 6.1 | 6.1 | 12.2 | ||||||||||||||||||||||||
Volumes per day (MMcfe/d) | 63 | 62 | 64 | 66 | 64 | 67 | 68 | 68 | ||||||||||||||||||||||||
Volumes net to Williams (after minority interest) (Bcfe) | 4.5 | 4.4 | 4.6 | 4.8 | 18.3 | 4.7 | 4.9 | 9.6 | ||||||||||||||||||||||||
Volumes net to Williams per day (MMcfe/d) | 49 | 49 | 50 | 52 | 50 | 53 | 53 | 53 | ||||||||||||||||||||||||
Total Domestic and International: | ||||||||||||||||||||||||||||||||
Volumes net to Williams (after minority interest) (Bcfe) | 96.7 | 105.4 | 105.4 | 111.2 | 418.7 | 115.0 | 112.2 | 227.2 | ||||||||||||||||||||||||
Volumes net to Williams per day (MMcfe/d) | 1,062 | 1,159 | 1,146 | 1,208 | 1,144 | 1,278 | 1,233 | 1,255 |
4
Gas Pipeline
(UNAUDITED)
(UNAUDITED)
2008 | 2009 | |||||||||||||||||||||||||||||||
(Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr | 2nd Qtr | Year | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Northwest Pipeline | $ | 107 | $ | 107 | $ | 108 | $ | 113 | $ | 435 | $ | 112 | $ | 107 | $ | 219 | ||||||||||||||||
Transcontinental Gas Pipe Line | 305 | 299 | 299 | 296 | 1,199 | 290 | 312 | 602 | ||||||||||||||||||||||||
Other | 1 | — | — | (1 | ) | — | (1 | ) | 2 | 1 | ||||||||||||||||||||||
Total revenues | 413 | 406 | 407 | 408 | 1,634 | 401 | 421 | 822 | ||||||||||||||||||||||||
Segment costs and expenses: | ||||||||||||||||||||||||||||||||
Costs and operating expenses | 201 | 207 | 210 | 222 | 840 | 195 | 232 | 427 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 36 | 40 | 42 | 39 | 157 | 42 | 39 | 81 | ||||||||||||||||||||||||
Other (income) expense — net | 6 | (5 | ) | 3 | 3 | 7 | — | 3 | 3 | |||||||||||||||||||||||
Total segment costs and expenses | 243 | 242 | 255 | 264 | 1,004 | 237 | 274 | 511 | ||||||||||||||||||||||||
Equity earnings | 10 | 15 | 21 | 13 | 59 | 15 | 15 | 30 | ||||||||||||||||||||||||
Reported segment profit: | ||||||||||||||||||||||||||||||||
Northwest Pipeline | 53 | 52 | 56 | 57 | 218 | 58 | 51 | 109 | ||||||||||||||||||||||||
Transcontinental Gas Pipe Line | 121 | 118 | 107 | 91 | 437 | 106 | 96 | 202 | ||||||||||||||||||||||||
Other | 6 | 9 | 10 | 9 | 34 | 15 | 15 | 30 | ||||||||||||||||||||||||
Total reported segment profit | 180 | 179 | 173 | 157 | 689 | 179 | 162 | 341 | ||||||||||||||||||||||||
Nonrecurring adjustments: | ||||||||||||||||||||||||||||||||
Northwest Pipeline | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Transcontinental Gas Pipe Line | — | (9 | ) | (10 | ) | — | (19 | ) | — | — | — | |||||||||||||||||||||
Total nonrecurring adjustments | — | (9 | ) | (10 | ) | — | (19 | ) | — | — | — | |||||||||||||||||||||
Recurring segment profit: | ||||||||||||||||||||||||||||||||
Northwest Pipeline | 53 | 52 | 56 | 57 | 218 | 58 | 51 | 109 | ||||||||||||||||||||||||
Transcontinental Gas Pipe Line | 121 | 109 | 97 | 91 | 418 | 106 | 96 | 202 | ||||||||||||||||||||||||
Other | 6 | 9 | 10 | 9 | 34 | 15 | 15 | 30 | ||||||||||||||||||||||||
Total recurring segment profit | $ | 180 | $ | 170 | $ | 163 | $ | 157 | $ | 670 | $ | 179 | $ | 162 | $ | 341 | ||||||||||||||||
Operating statistics | ||||||||||||||||||||||||||||||||
Northwest Pipeline | ||||||||||||||||||||||||||||||||
Throughput (TBtu) | 219.8 | 171.0 | 179.5 | 211.1 | 781.4 | 224.0 | 172.9 | 396.9 | ||||||||||||||||||||||||
Average daily transportation volumes (TBtu) | 2.4 | 1.9 | 2.0 | 2.3 | 2.1 | 2.5 | 1.9 | 2.2 | ||||||||||||||||||||||||
Average daily firm reserved capacity (TBtu) | 2.6 | 2.5 | 2.5 | 2.5 | 2.5 | 2.6 | 2.6 | 2.6 | ||||||||||||||||||||||||
Transcontinental Gas Pipe Line | ||||||||||||||||||||||||||||||||
Throughput (TBtu) | 536.5 | 443.0 | 448.5 | 482.4 | 1,910.4 | 549.7 | 420.8 | 970.5 | ||||||||||||||||||||||||
Average daily transportation volumes (TBtu) | 5.9 | 4.9 | 4.9 | 5.2 | 5.2 | 6.1 | 4.6 | 5.4 | ||||||||||||||||||||||||
Average daily firm reserved capacity (TBtu) | 7.0 | 6.7 | 6.6 | 6.8 | 6.8 | 7.0 | 6.6 | 6.8 |
5
Midstream Gas & Liquids
(UNAUDITED)
(UNAUDITED)
2008 | 2009 | |||||||||||||||||||||||||||||||
(Dollars in millions) | 1st Qtr * | 2nd Qtr* | 3rd Qtr* | 4th Qtr* | Year* | 1st Qtr * | 2nd Qtr | Year | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Gathering & processing | $ | 97 | $ | 108 | $ | 105 | $ | 104 | $ | 414 | $ | 107 | $ | 106 | $ | 213 | ||||||||||||||||
NGL sales from gas processing | 383 | 473 | 397 | 270 | 1,523 | 150 | 172 | 322 | ||||||||||||||||||||||||
Production handling and transportation | 27 | 29 | 24 | 28 | 108 | 33 | 33 | 66 | ||||||||||||||||||||||||
Olefins sales (including Gulf and Canada) | 325 | 335 | 319 | 146 | 1,125 | 143 | 152 | 295 | ||||||||||||||||||||||||
Marketing sales | 1,178 | 1,372 | 1,094 | 533 | 4,177 | 466 | 579 | 1,045 | ||||||||||||||||||||||||
Other revenues | 51 | 57 | 49 | 58 | 215 | 38 | 42 | 80 | ||||||||||||||||||||||||
2,061 | 2,374 | 1,988 | 1,139 | 7,562 | 937 | 1,084 | 2,021 | |||||||||||||||||||||||||
Intrasegment eliminations | (544 | ) | (664 | ) | (596 | ) | (283 | ) | (2,087 | ) | (244 | ) | (279 | ) | (523 | ) | ||||||||||||||||
Total revenues | 1,517 | 1,710 | 1,392 | 856 | 5,475 | 693 | 805 | 1,498 | ||||||||||||||||||||||||
Segment costs and expenses: | ||||||||||||||||||||||||||||||||
NGL cost of goods sold | 187 | 286 | 196 | 101 | 770 | 92 | 69 | 161 | ||||||||||||||||||||||||
Olefins cost of goods sold | 280 | 279 | 288 | 132 | 979 | 119 | 120 | 239 | ||||||||||||||||||||||||
Marketing cost of goods sold | 1,180 | 1,357 | 1,118 | 615 | 4,270 | 461 | 564 | 1,025 | ||||||||||||||||||||||||
Other cost of goods sold | 16 | 15 | 13 | 9 | 53 | 7 | 5 | 12 | ||||||||||||||||||||||||
Operating costs | 154 | 141 | 152 | 163 | 610 | 147 | 155 | 302 | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 34 | 39 | 36 | 35 | 144 | 35 | 40 | 75 | ||||||||||||||||||||||||
Other (income) expense — net | (5 | ) | 3 | (16 | ) | (58 | ) | (76 | ) | (7 | ) | 1 | (6 | ) | ||||||||||||||||||
Intrasegment eliminations | (544 | ) | (664 | ) | (596 | ) | (283 | ) | (2,087 | ) | (244 | ) | (279 | ) | (523 | ) | ||||||||||||||||
Total segment costs and expenses | 1,302 | 1,456 | 1,191 | 714 | 4,663 | 610 | 675 | 1,285 | ||||||||||||||||||||||||
Equity earnings | 23 | 16 | 28 | (9 | ) | 58 | 4 | 7 | 11 | |||||||||||||||||||||||
Income from investments | — | — | — | 1 | 1 | (75 | ) | — | (75 | ) | ||||||||||||||||||||||
Reported segment profit | 238 | 270 | 229 | 134 | 871 | 12 | 137 | 149 | ||||||||||||||||||||||||
Nonrecurring adjustments | — | (2 | ) | (6 | ) | (29 | ) | (37 | ) | 69 | — | 69 | ||||||||||||||||||||
Recurring segment profit | $ | 238 | $ | 268 | $ | 223 | $ | 105 | $ | 834 | $ | 81 | $ | 137 | $ | 218 | ||||||||||||||||
Operating statistics | ||||||||||||||||||||||||||||||||
Domestic Gathering and Processing | ||||||||||||||||||||||||||||||||
Gathering volumes (TBtu) | 234 | 268 | 254 | 257 | 1,013 | 252 | 251 | 503 | ||||||||||||||||||||||||
Plant inlet natural gas volumes (Tbtu) | 325 | 337 | 328 | 321 | 1,311 | 318 | 308 | 626 | ||||||||||||||||||||||||
NGL equity sales (million gallons) ** | 308 | 366 | 272 | 285 | 1,231 | 292 | 297 | 589 | ||||||||||||||||||||||||
NGL margin ($/gallon) | $ | 0.64 | $ | 0.51 | $ | 0.74 | $ | 0.59 | $ | 0.61 | $ | 0.20 | $ | 0.35 | $ | 0.27 | ||||||||||||||||
NGL production (million gallons) ** | 634 | 645 | 555 | 538 | 2,372 | 579 | 590 | 1,169 | ||||||||||||||||||||||||
Olefins | ||||||||||||||||||||||||||||||||
Canadian NGL equity sales (million gallons) | 33 | 22 | 20 | 37 | 112 | 36 | 30 | 66 | ||||||||||||||||||||||||
Olefins sales (Ethylene & Propylene) (million lbs) | 457 | 428 | 407 | 313 | 1,605 | 462 | 445 | 907 | ||||||||||||||||||||||||
Discovery Producer Services L.L.C. (equity investment) - 100% | ||||||||||||||||||||||||||||||||
NGL equity sales (million gallons) | 37 | 23 | 21 | 4 | 85 | 12 | 25 | 37 | ||||||||||||||||||||||||
NGL production (million gallons) | 70 | 58 | 43 | 10 | 181 | 30 | 56 | 86 | ||||||||||||||||||||||||
Laurel Mountain Midstream, LLC (equity investment) - 100% | ||||||||||||||||||||||||||||||||
Gathering volumes (Tbtu) | — | — | — | — | — | — | 3 | 3 |
* | Amounts have been recast to reflect certain Venezuela operations as discontinued operations. | |
** | Excludes volumes associated with partially owned assets that are not consolidated for financial reporting purposes. |
6
Gas Marketing Services
(UNAUDITED)
(UNAUDITED)
2008 | 2009 | |||||||||||||||||||||||||||||||
(Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr | 2nd Qtr | Year | ||||||||||||||||||||||||
Revenues | $ | 1,650 | $ | 2,010 | $ | 1,716 | $ | 1,036 | $ | 6,412 | $ | 867 | $ | 598 | $ | 1,465 | ||||||||||||||||
Segment costs and expenses: | ||||||||||||||||||||||||||||||||
Costs and operating expenses | 1,625 | 2,049 | 1,695 | 1,019 | 6,388 | 864 | 599 | 1,463 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 4 | 7 | 4 | 5 | �� | 20 | 5 | 4 | 9 | |||||||||||||||||||||||
Other expense — net | — | — | 1 | — | 1 | — | 1 | 1 | ||||||||||||||||||||||||
Total segment costs and expenses | 1,629 | 2,056 | 1,700 | 1,024 | 6,409 | 869 | 604 | 1,473 | ||||||||||||||||||||||||
Reported segment profit (loss) | 21 | (46 | ) | 16 | 12 | 3 | (2 | ) | (6 | ) | (8 | ) | ||||||||||||||||||||
Nonrecurring adjustments | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Recurring segment profit (loss) | $ | 21 | $ | (46 | ) | $ | 16 | $ | 12 | $ | 3 | $ | (2 | ) | $ | (6 | ) | $ | (8 | ) |
7
Capital Expenditures and Investments
(UNAUDITED)
(UNAUDITED)
2008 | 2009 | |||||||||||||||||||||||||||||||
(Dollars in millions) | 1st Qtr** | 2nd Qtr** | 3rd Qtr** | 4th Qtr** | Year** | 1st Qtr** | 2nd Qtr | Year | ||||||||||||||||||||||||
Capital expenditures: | ||||||||||||||||||||||||||||||||
Exploration & Production | $ | 363 | $ | 705 | $ | 844 | $ | 554 | $ | 2,466 | $ | 444 | $ | 229 | $ | 673 | ||||||||||||||||
Gas Pipeline: | ||||||||||||||||||||||||||||||||
Northwest Pipeline | 17 | 20 | 28 | 24 | 89 | 9 | 36 | 45 | ||||||||||||||||||||||||
Transcontinental Gas Pipe Line | 33 | 49 | 55 | 68 | 205 | 22 | 45 | 67 | ||||||||||||||||||||||||
Other | 2 | (2 | ) | (1 | ) | 1 | — | — | — | — | ||||||||||||||||||||||
Total | 52 | 67 | 82 | 93 | 294 | 31 | 81 | 112 | ||||||||||||||||||||||||
Midstream Gas & Liquids | 104 | 204 | 135 | 146 | 589 | 133 | 142 | 275 | ||||||||||||||||||||||||
Gas Marketing Services | — | — | 1 | — | 1 | — | — | — | ||||||||||||||||||||||||
Other | 16 | 8 | 8 | 9 | 41 | 4 | 13 | 17 | ||||||||||||||||||||||||
Discontinued Operations | 1 | 1 | — | 1 | 3 | — | — | — | ||||||||||||||||||||||||
Total* | $ | 536 | $ | 985 | $ | 1,070 | $ | 803 | $ | 3,394 | $ | 612 | $ | 465 | $ | 1,077 | ||||||||||||||||
Purchase of investments: | ||||||||||||||||||||||||||||||||
Exploration & Production | — | 3 | 3 | (3 | ) | 3 | — | — | — | |||||||||||||||||||||||
Gas Pipeline | 20 | 28 | 36 | 8 | 92 | 10 | 5 | 15 | ||||||||||||||||||||||||
Midstream Gas & Liquids | — | — | — | — | — | 3 | 112 | 115 | ||||||||||||||||||||||||
Other | — | 16 | (1 | ) | 1 | 16 | — | (1 | ) | (1 | ) | |||||||||||||||||||||
Total | $ | 20 | $ | 47 | $ | 38 | $ | 6 | $ | 111 | $ | 13 | $ | 116 | $ | 129 | ||||||||||||||||
Summary: | ||||||||||||||||||||||||||||||||
Exploration & Production | $ | 363 | $ | 708 | $ | 847 | $ | 551 | $ | 2,469 | $ | 444 | $ | 229 | $ | 673 | ||||||||||||||||
Gas Pipeline | 72 | 95 | 118 | 101 | 386 | 41 | 86 | 127 | ||||||||||||||||||||||||
Midstream Gas & Liquids | 104 | 204 | 135 | 146 | 589 | 136 | 254 | 390 | ||||||||||||||||||||||||
Gas Marketing Services | — | — | 1 | — | 1 | — | — | — | ||||||||||||||||||||||||
Other | 16 | 24 | 7 | 10 | 57 | 4 | 12 | 16 | ||||||||||||||||||||||||
Discontinued Operations | 1 | 1 | — | 1 | 3 | — | — | — | ||||||||||||||||||||||||
Total | $ | 556 | $ | 1,032 | $ | 1,108 | $ | 809 | $ | 3,505 | $ | 625 | $ | 581 | $ | 1,206 | ||||||||||||||||
Cumulative summary: | ||||||||||||||||||||||||||||||||
Exploration & Production | $ | 363 | $ | 1,071 | $ | 1,918 | $ | 2,469 | $ | 2,469 | $ | 444 | $ | 673 | $ | 673 | ||||||||||||||||
Gas Pipeline | 72 | 167 | 285 | 386 | 386 | 41 | 127 | 127 | ||||||||||||||||||||||||
Midstream Gas & Liquids | 104 | 308 | 443 | 589 | 589 | 136 | 390 | 390 | ||||||||||||||||||||||||
Gas Marketing Services | — | — | 1 | 1 | 1 | — | — | — | ||||||||||||||||||||||||
Other | 16 | 40 | 47 | 57 | 57 | 4 | 16 | 16 | ||||||||||||||||||||||||
Discontinued Operations | 1 | 2 | 2 | 3 | 3 | — | — | — | ||||||||||||||||||||||||
Total | $ | 556 | $ | 1,588 | $ | 2,696 | $ | 3,505 | $ | 3,505 | $ | 625 | $ | 1,206 | $ | 1,206 | ||||||||||||||||
Capital expenditures incurred and purchase of investments | ||||||||||||||||||||||||||||||||
Increases to property, plant and equipment | $ | 579 | $ | 982 | $ | 1,032 | $ | 882 | $ | 3,475 | $ | 484 | $ | 420 | $ | 904 | ||||||||||||||||
Purchase of investments | 20 | 47 | 38 | 6 | 111 | 13 | 116 | 129 | ||||||||||||||||||||||||
Total | $ | 599 | $ | 1,029 | $ | 1,070 | $ | 888 | $ | 3,586 | $ | 497 | $ | 536 | $ | 1,033 | ||||||||||||||||
* Increases to property, plant and equipment | $ | 579 | $ | 982 | $ | 1,032 | $ | 882 | $ | 3,475 | $ | 484 | $ | 420 | $ | 904 | ||||||||||||||||
Changes in related accounts payable and accrued liabilities | (43 | ) | 3 | 38 | (79 | ) | (81 | ) | 128 | 45 | 173 | |||||||||||||||||||||
Capital expenditures | $ | 536 | $ | 985 | $ | 1,070 | $ | 803 | $ | 3,394 | $ | 612 | $ | 465 | $ | 1,077 | ||||||||||||||||
** | Amounts have been recast to reflect certain Venezuela operations as discontinued operations. |
8
Depreciation, Depletion and Amortization and Other Selected Financial Data
(UNAUDITED)
(UNAUDITED)
2008 | 2009 | |||||||||||||||||||||||||||||||
(Dollars in millions) | 1st Qtr* | 2nd Qtr* | 3rd Qtr* | 4th Qtr* | Year* | 1st Qtr* | 2nd Qtr | Year | ||||||||||||||||||||||||
Depreciation, depletion and amortization: | ||||||||||||||||||||||||||||||||
Exploration & Production | $ | 165 | $ | 180 | $ | 190 | $ | 202 | $ | 737 | $ | 219 | $ | 217 | $ | 436 | ||||||||||||||||
Gas Pipeline: | ||||||||||||||||||||||||||||||||
Northwest Pipeline | 22 | 21 | 21 | 22 | 86 | 22 | 21 | 43 | ||||||||||||||||||||||||
Transcontinental Gas Pipe Line | 55 | 59 | 59 | 62 | 235 | 61 | 61 | 122 | ||||||||||||||||||||||||
Other | — | — | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||
Total | 77 | 80 | 80 | 84 | 321 | 83 | 83 | 166 | ||||||||||||||||||||||||
Midstream Gas & Liquids | 48 | 47 | 51 | 57 | 203 | 53 | 53 | 106 | ||||||||||||||||||||||||
Gas Marketing Services | 1 | — | — | — | 1 | — | — | — | ||||||||||||||||||||||||
Other | 4 | 3 | 5 | 6 | 18 | 4 | 6 | 10 | ||||||||||||||||||||||||
Discontinued Operations | 7 | 8 | 7 | 8 | 30 | 8 | — | 8 | ||||||||||||||||||||||||
Total | $ | 302 | $ | 318 | $ | 333 | $ | 357 | $ | 1,310 | $ | 367 | $ | 359 | $ | 726 | ||||||||||||||||
Other selected financial data: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 2,239 | $ | 1,937 | $ | 1,524 | $ | 1,438 | $ | 1,438 | $ | 1,785 | $ | 1,853 | $ | 1,853 | ||||||||||||||||
Total assets | $ | 27,172 | $ | 31,216 | $ | 26,893 | $ | 26,006 | $ | 26,006 | $ | 25,368 | $ | 25,026 | $ | 25,026 | ||||||||||||||||
Capital structure: | ||||||||||||||||||||||||||||||||
Debt | ||||||||||||||||||||||||||||||||
Current | $ | 49 | $ | 46 | $ | 46 | $ | 18 | $ | 18 | $ | 3 | $ | 13 | $ | 13 | ||||||||||||||||
Noncurrent | $ | 7,638 | $ | 7,711 | $ | 7,685 | $ | 7,683 | $ | 7,683 | $ | 8,278 | $ | 8,265 | $ | 8,265 | ||||||||||||||||
Stockholders’ equity | $ | 7,801 | $ | 7,652 | $ | 8,574 | $ | 8,440 | $ | 8,440 | $ | 8,326 | $ | 8,324 | $ | 8,324 | ||||||||||||||||
Debt to debt-plus-stockholders’ equity ratio | 49.6 | % | 50.3 | % | 47.4 | % | 47.7 | % | 47.7 | % | 49.9 | % | 49.9 | % | 49.9 | % |
* | Amounts have been recast to reflect certain Venezuela operations as discontinued operations. |
9
Adjustment to remove MTM effect
Dollars in millions except for per share amounts
2nd Quarter | YTD | ||||||||||||||||
2009 | 2008* | 2009* | 2008* | ||||||||||||||
Recurring income from cont. ops available to common shareholders | $ | 120 | $ | 390 | $ | 226 | $ | 728 | |||||||||
Recurring diluted earnings per common share | $ | 0.20 | $ | 0.66 | $ | 0.39 | $ | 1.22 | |||||||||
Mark-to-Market (MTM) adjustments for Gas Marketing | (7 | ) | 15 | 29 | 12 | ||||||||||||
Tax effect of total MTM adjustments | 3 | (6 | ) | (11 | ) | (5 | ) | ||||||||||
After tax MTM adjustments | (4 | ) | 9 | 18 | 7 | ||||||||||||
Recurring income from cont. ops available to common shareholders after MTM adjust. | $ | 116 | $ | 399 | $ | 244 | $ | 735 | |||||||||
Recurring diluted earnings per share after MTM adj. | $ | 0.20 | $ | 0.67 | $ | 0.42 | $ | 1.23 | |||||||||
weighted average shares — diluted (thousands) | 588,780 | 596,187 | 587,999 | 597,404 |
Note: all amounts attributable to Williams
Adjustments have been made to reverse estimated forward unrealized MTM gains/losses and add estimated realized gains/losses from MTM previously recognized, i.e. assumes MTM accounting had never been applied to designated hedges and other derivatives.
Adjustments have been made to reverse estimated forward unrealized MTM gains/losses and add estimated realized gains/losses from MTM previously recognized, i.e. assumes MTM accounting had never been applied to designated hedges and other derivatives.
Some annual figures may differ from sum of quarterly figures due to rounding.
* Amounts have been recast to reflect certain Venezuela operations as discontinued operations.
Non-GAAP Measures:
This press release includes certain financial measures, recurring earnings and recurring segment profit, that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission. Recurring earnings and recurring segment profit exclude items of income or loss that the company characterizes as unrepresentative of its ongoing operations. Both measures provide investors meaningful insight into the company’s results from ongoing operations. This press release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are widely accepted financial indicators used by investors to compare a company’s performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the company. Neither recurring earnings nor recurring segment profit are intended to represent an alternative to net income or segment profit. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.
Certain financial information in this press release is also shown including Gas Marketing Services mark-to-market adjustments. This press release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses the mark-to-market adjustments to better reflect Gas Marketing’s results on a basis that is more consistent with Gas Marketing’s portfolio cash flows and to aid investor understanding. The adjustments reverse forward unrealized mark-to-market gains or losses from derivatives and add realized gains or losses from derivatives for which mark-to-market income has been previously recognized, with the effect that the resulting adjusted segment profit is presented as if mark-to-market accounting had never been applied to Gas Marketing Services’ derivatives. The measure is limited by the fact that it does not reflect potential unrealized future losses or gains on derivative contracts. However, management compensates for this limitation since derivative assets and liabilities do reflect unrealized gains and losses of derivative contracts. Overall, management believes the mark-to-market adjustments provide an alternative measure that more closely matches realized cash flows for the Gas Marketing segment but does not substitute for actual cash flows. We also apply the mark-to-market adjustment and the recurring adjustments to present a measure referred to as recurring income from continuing operations after mark-to-market adjustments.