EX-99.1 2 c60257exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
           



News Release
  Williams (NYSE: WMB)
One Williams Center
Tulsa, OK 74172
800-Williams
www.williams.com 		    (WILLIAMS LOGO)
DATE: Sept. 16, 2010
     
MEDIA CONTACT:
  INVESTOR CONTACT:
Jeff Pounds
  Sharna Reingold
(918) 573-3332
  (918) 573-2078
Williams Updates Earnings, Capital Expenditure Guidance for 2010-12
TULSA, Okla. – Williams (NYSE: WMB) today announced updates to its earnings and capital expenditure guidance for 2010-12.
Steve Malcolm, Williams’ chairman, president and chief executive officer, will discuss the updated guidance in his presentation today at the Barclays Capital CEO Energy-Power Conference. His presentation is available for download at www.williams.com/investors.
“We are adjusting our outlook and earnings guidance to reflect the current state of the economy and commodity markets,” Malcolm said. “Despite the lower expected natural gas and NGL margins, we are still projecting steady earnings growth in 2010-12.
“We have demonstrated over the years that we are capable of seizing growth opportunities in a variety of commodity environments,” Malcolm said. “There are opportunities for growth across all of our businesses, and we will continue to pursue them with the same discipline that we always have.”
The new earnings guidance for 2010-12 reflects lower expected natural gas prices and lower expected natural gas liquid (NGL) margins. Additionally, the company is lowering its capital expenditure guidance for 2011-12, which will result in a slower rate of natural gas production growth during that time frame.
The company’s updated assumptions for certain energy commodity prices for 2010-12 and the corresponding guidance for the company’s earnings and capital expenditures are displayed in the following table.

 

Commodity Price Assumptions and Financial Outlook
As of Sept. 16, 2010
                                                                             
    2010     2011     2012
    Low   Mid   High     Low   Mid   High     Low   Mid   High
                 
Natural Gas ($/MMBtu):
                                                                            
NYMEX
   $ 4.35     $ 4.65     $ 4.95       $ 4.00     $ 5.00     $ 6.00       $ 4.30     $ 5.40     $ 6.50  
Rockies
   $ 3.80     $ 4.05     $ 4.30       $ 3.50     $ 4.40     $ 5.30       $ 3.90     $ 4.85     $ 5.80  
Avg. San Juan/Mid-Continent
   $ 4.05     $ 4.28     $ 4.50       $ 3.65     $ 4.58     $ 5.50       $ 4.00     $ 5.00     $ 6.00  
 
                                                                            
Oil / NGL:
                                                                            
Crude Oil — WTI ($  per barrel)
   $ 73     $ 78     $ 83       $ 65     $ 80     $ 95       $ 67     $ 82     $ 97  
Crude to Gas Ratio
     16.8 x      16.8 x      16.8 x        15.8 x      16.0 x      16.3 x        14.9 x      15.3 x      15.6 x
NGL to Crude Oil Relationship
     52 %     51 %     49 %       52 %     53 %     53 %       52 %     54 %     55 %
 
                                                                            
Average NGL Margins ($  per gallon)
   $ 0.49     $ 0.51     $ 0.53       $ 0.46     $ 0.58     $ 0.70       $ 0.42     $ 0.56     $ 0.69  
 
                                                                            
Capital Expenditures (millions)
                                                                            
Williams Partners
   $ 1,385     $ 1,520     $ 1,655       $ 830     $ 1,005     $ 1,180       $ 805     $ 980     $ 1,155  
Exploration & Production
     1,900       2,000       2,100         870       1,210       1,550         830       1,330       1,830  
Other
     150       175       200         370       420       470         500       550       600  
                 
Total Capital Expenditures (1)
   $ 3,450     $ 3,700     $ 3,950       $ 2,075     $ 2,638     $ 3,200       $ 2,125     $ 2,850     $ 3,575  
 
                                                                            
Cash Flow from Continuing Operations
   $ 2,350     $ 2,525     $ 2,700       $ 2,200     $ 2,700     $ 3,200       $ 2,300     $ 3,000     $ 3,700  
 
                                                                            
Adjusted Segment Profit (millions) (2)
                                                                            
Williams Partners
   $ 1,360     $ 1,423     $ 1,485       $ 1,400     $ 1,583     $ 1,765       $ 1,500     $ 1,745     $ 1,990  
Exploration & Production after MTM adj.
     325       375       425         155       385       615         100       450       800  
Other
     175       183       190         160       190       220         185       223       260  
                 
Total Adjusted Segment Profit (3)
   $ 1,875     $ 1,988     $ 2,100       $ 1,725     $ 2,163     $ 2,600       $ 1,800     $ 2,425     $ 3,050  
 
                                                                            
Adjusted Diluted Earnings Per Share (4)
   $ 1.00     $ 1.10     $ 1.20       $ 0.85     $ 1.25     $ 1.65       $ 0.95     $ 1.48     $ 2.00  
 
(1)   Sum of the ranges for each business line may not match total range.
 
(2)   Adjusted Segment Profit is adjusted to remove items considered unrepresentative of ongoing operations and the effect of mark-to-market accounting and is a non-GAAP measure. Reconciliations to the most relevant GAAP measures are attached to this news release.
 
(3)   Sum of the ranges for the business units does not match the consolidated total due to rounding and other adjustments.
 
(4)   Adjusted Diluted Earnings Per Share is adjusted to remove items considered unrepresentative of ongoing operations and the effect of mark-to-market accounting and is a non-GAAP measure. Reconciliations to the most relevant GAAP measures are attached to this news release.
Non-GAAP Measures
This press release includes certain financial measures, adjusted diluted earnings per share and adjusted segment profit that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission. Adjusted diluted earnings per share and adjusted 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 adjusted diluted earnings per share nor adjusted segment profit are intended to represent an alternative to diluted earnings per share 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 mark-to-market adjustments for certain hedges and other derivatives in Exploration & Production, such as adjusted diluted earnings per share and adjusted segment profit. 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 results on a basis that is more consistent with derivative 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 these 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 these derivatives but does not substitute for actual cash flows.
About Williams (NYSE: WMB)
Williams is an integrated natural gas company focused on exploration and production, midstream gathering and processing, and interstate natural gas transportation primarily in the Rocky Mountains, Gulf Coast, Pacific Northwest, Eastern Seaboard and the Marcellus Shale in Pennsylvania. Most of the company’s interstate gas pipeline and midstream assets are held through its 80-percent ownership interest (including the general-partner interest) in Williams Partners L.P. (NYSE: WPZ), a leading diversified master limited partnership. More information is available at www.williams.com. Go to http://www.b2i.us/irpass.asp?BzID=630&to=ea&s=0 to join our e-mail list.
# # #
Portions of this document may constitute “forward-looking statements” as defined by federal law. Although the company believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Any such statements are made in reliance on the “safe harbor” protections provided under the Private Securities Reform Act of 1995. Additional information about issues that could lead to material changes in performance is contained in the company’s annual reports filed with the Securities and Exchange Commission.

 

 

Reconciliation of Income (Loss) from Continuing Operations Attributable to The Williams Companies, Inc. to Adjusted Earnings
(UNAUDITED)
                         
    2010  
(Dollars in millions, except per-share amounts)   1st Qtr     2nd Qtr     Year  
 
Income (loss) from continuing operations attributable to The Williams Companies, Inc. available to common stockholders
   $ (195 )   $ 187     $ (8 )
 
                  
 
                        
Income (loss) from continuing operations — diluted earnings per common share
   $ (0.33 )   $ 0.31     $ (0.01 )
 
                  
 
                        
Adjustments:
                        
 
                        
Williams Partners (WP)
                        
Gain on sale of base gas from Hester storage field
   $ (5 )   $ (3 )   $ (8 )
Involuntary conversion gain related to Ignacio
     —       (4 )     (4 )
Involuntary conversion gain related Hurricane Ike
     —       (7 )     (7 )
Gain on sale of Cameron Meadows
     —       —       —  
Restructuring transaction costs
     —       —       —  
Unclaimed property assessment accrual — TGPL
     —       (1 )     (1 )
Unclaimed property assessment accrual — NWP
     —       (1 )     (1 )
 
                  
Total Williams Partners nonrecurring items
     (5 )     (16 )     (21 )
 
                        
Exploration & Production (E&P)
                        
Penalties from early release of drilling rigs
     —       —       —  
Impairments of certain natural gas properties
     —       —       —  
Depletion expense adjustment related to new guidance
     —       —       —  
Unclaimed property assessment accrual
     —       2       2  
Reserve for/(recovery of) receivables from bankrupt counterparty
     —       —       —  
Accrual for Wyoming severance taxes
     —       —       —  
 
                  
Total Exploration & Production nonrecurring items
     —       2       2  
 
                        
Other
                        
(Gain)/Loss from Venezuela investment
     —       (13 )     (13 )
Customer settlement gain
     —       (6 )     (6 )
 
                  
Total Other nonrecurring items
     —       (19 )     (19 )
 
                        
 
                  
Adjustment included in segment profit (loss)
     (5 )     (33 )     (38 )
 
                        
Adjustments below segment profit (loss)
                        
Loss associated with Venezuela investment — E&P
     —       —       —  
Impairment of cost-based investment — Corporate
     —       —       —  
Reversal of litigation contingency — Corporate
     —       —       —  
Early debt retirement costs — Corporate
     606       —       606  
Acceleration of unamortized debt costs related to credit facility amendment — Corporate
     3       —       3  
Acceleration of unamortized debt costs related to credit facility amendment — Williams Partners
     1       —       1  
Restructuring transaction costs — Corporate
     33       —       33  
Restructuring transaction costs — Williams Partners
     6       2       8  
Allocation of Williams Partners’ nonrecurring items to noncontrolling interests
     (4 )     1       (3 )
 
                  
 
     645       3       648  
 
                        
Total adjustments
     640       (30 )     610  
Less tax effect for above items
     (242 )     7       (235 )
Adjustment reduction of tax benefits on the Medicare Part D federal subsidy due to enacted healthcare legislation
     11       —       11  
 
                  
 
                        
Adjusted income from continuing operations available to common stockholders
   $ 214     $ 164     $ 378  
 
                  
 
                        
Adjusted diluted earnings per common share
   $ 0.37     $ 0.28     $ 0.65  
 
                  
 
                        
Weighted-average shares — diluted (thousands)
     583,929       592,498       584,173  
 
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.

 

Non-GAAP Reconciliation
Segment Profit Guidance – Reported to Adjusted
                                                                             
Dollars in millions   2010 Guidance     2011 Guidance     2012 Guidance
    Low   Midpoint   High     Low   Midpoint   High     Low   Midpoint   High
Reported Segment Profit:
                                                                            
Williams Partners (WPZ)
     1,381       1,444       1,506         1,400       1,583       1,765         1,500       1,745       1,990  
Exploration & Production (incl. Gas Mkt)
     348       398       448         150       380       610         100       450       800  
Other
     194       202       209         160       190       220         185       223       260  
 
                                                                            
Total Reported Segment Profit
     1,938       2,051       2,163         1,720       2,158       2,595         1,800       2,425       3,050  
 
                                                                            
Adjustments:
                                                                            
Gain on sale of base gas from Hester storage field
     (8 )     (8 )     (8 )       —       —       —         —       —       —  
Involuntary conversion gain related to Hurricane Ike
     (7 )     (7 )     (7 )       —       —       —         —       —       —  
Involuntary conversion gain related to Ignacio
     (4 )     (4 )     (4 )       —       —       —         —       —       —  
Unclaimed property assessment accrual
     (2 )     (2 )     (2 )       —       —       —         —       —       —  
 
                                                                            
Total Adjustments — Williams Partners (WPZ)
     (21 )     (21 )     (21 )       —       —       —         —       —       —  
 
                                                                            
Unclaimed property assessment accrual
     2       2       2         —       —       —         —       —       —  
 
                                                                            
Total Adjustments — Exploration & Production
     2       2       2         —       —       —         —       —       —  
 
                                                                            
Gain from Venezuela investment
     (13 )     (13 )     (13 )       —       —       —         —       —       —  
Aux Sable breach of contract settlement gain
     (6 )     (6 )     (6 )       —       —       —         —       —       —  
 
                                                                            
Total Adjustments — Other
     (19 )     (19 )     (19 )       —       —       —         —       —       —  
 
                                                                            
 
                                                                            
Total Adjustments
     (38 )     (38 )     (38 )       —       —       —         —       —       —  
 
                                                                            
Mark-to-Market Adjustment
     (25 )     (25 )     (25 )       5       5       5         —       —       —  
 
                                                                            
Adjusted Segment Profit:
                                                                            
Williams Partners (WPZ)
     1,360       1,423       1,485         1,400       1,583       1,765         1,500       1,745       1,990  
Exploration & Production after MTM adj.
     325       375       425         155       385       615         100       450       800  
Other
     175       183       190         160       190       220         185       223       260  
 
                                                                            
Total Adjusted Segment Profit
     1,875       1,988       2,100         1,725       2,163       2,600         1,800       2,425       3,050  

 

Non-GAAP Reconciliation
Forecast Reported Income from Continuing Operations Adjustments
to Adjusted Diluted Earnings Per Share
                         
Dollars in millions, except per-share amounts   2010   2011   2012
Reported income from continuing operations
   $ 229 - 349     $ 505 - 985     $ 575 - 1,210  
Adjustments — pretax
     610       —       —  
Less taxes
     224       —       —  
 
                        
Adjustments — after tax
     386       —       —  
Adjusted income from continuing ops
     615 - 735       505 - 985       575 - 1,210  
Adjusted EPS before MTM
   $ 1.03 - 1.23     $ 0.84 - 1.64     $ 0.95 - 2.00  
Mark-to-market adjustment (pretax)
     (25 )     5       —  
Less taxes @ 39%
     (10 )     2       —  
 
                        
Mark-to-market adjustment after tax
     (15 )     3       —  
Adjusted Inc. from cont ops after MTM adj.
     600 - 720       508 - 988       575 - 1,210  
Adjusted Diluted EPS
   $ 1.00 - 1.20     $ 0.85 - 1.65     $ 0.95 - 2.00