Attached files
| file | filename |
|---|---|
| 8-K - 8-K - WILLIAMS COMPANIES, INC. | d742101d8k.htm |
| EX-10.1 - EX-10.1 - WILLIAMS COMPANIES, INC. | d742101dex101.htm |
| EX-99.1 - EX-99.1 - WILLIAMS COMPANIES, INC. | d742101dex991.htm |
 The
Williams Companies, Inc. Williams agrees to acquire a 50% GP interest and 55.1
million LP units in
ACMP from Global Infrastructure Partners
Investor Conference Call
June
16
th
,
2014
Alan Armstrong, Chief Executive Officer
Don Chappel, Chief Financial Officer
Exhibit 99.2
©
2014 The Williams Companies, Inc. All rights reserved.
|
 ©
2014 The Williams Companies, Inc. All rights reserved.
2
Our
reports,
filings,
and
other
public
announcements
may
include
"forward-looking
statements"
within
the
meaning
of
Section
27A
of
the
Securities
Act
of
1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These forward-looking statements relate to anticipated
financial performance, management's plans and objectives for future
operations, business prospects, outcome of regulatory proceedings, market conditions and
other matters. We make these forward-looking statements in reliance on the safe
harbor protections provided under the Private Securities Litigation Reform Act
of 1995. All statements, other than statements of historical facts, included in
this report that address activities, events or developments that we expect, believe or
anticipate will exist or may occur in the future, are forward-looking statements.
Forward-looking statements can be identified by various forms of words such
as "anticipates," "believes," "seeks," "could,"
"may," "should," "continues," "estimates,"
"expects," "forecasts," "intends," "might," "goals," "objectives,"
"targets," "planned," "potential," "projects,"
"scheduled," "will," "assumes," "guidance," "outlook," "in service date" or other
similar expressions. These
forward-looking statements are based on management's beliefs and assumptions and
on information currently available to management and include, among others,
statements regarding: Forward-looking Statements
•
The closing of, and the sources of funding for, the anticipated transaction with certain Global
Infrastructure Partners funds (the “GIP Purchase”);
•
Expected production increases in in the producing areas served Access Midstream Partners, L.P.
(“ACMP”), as well as its levels of cash distributions with respect to general partner
interests, incentive distribution rights, and limited partner interests;
•
Increases in our fee-based revenues as a percentage of our gross margin following the GIP
Purchase;
•
Planned increases in our dividends following the GIP Purchase; •
The timing of the drop-down of our remaining NGL & Petchem Services assets and projects; •
The completion of the proposed merger (the “Proposed Merger”) of ACMP and Williams Partners
L.P. (“WPZ”), including the approval of the Proposed Merger by the conflicts committees
of each partnership and the exchange ratio to be utilized in the Proposed Merger;
•
The benefits of the Proposed Merger to unitholders of ACMP and WPZ, respectively, and to our
stockholders;
•
The operations, performance, levels of distributions, and distribution coverage of the merged
partnership following the Proposed Merger;
•
Our future credit ratings and the future credit ratings of WPZ and ACMP; •
The expected timing for the restart of WPZ’s Geismar, Louisiana, olefins plant; •
The expected timing of receipt and amounts of proceeds from insurance claims related to the Geismar
plant;
•
Amounts and the nature of future capital expenditures; •
Expansion and growth of our business and operations; •
Financial condition and liquidity;
•
Business strategy;
•
Cash flow from operations or results of operations, including cash flow per share following the GIP
Purchase;
•
The levels of dividends to stockholders; •
Natural gas, natural gas liquids and olefins, supply, prices and demand; and •
Demand for our services
|
 ©
2014 The Williams Companies, Inc. All rights reserved.
3
Whether we will receive necessary regulatory approvals, or be required to make any
divestitures, under provisions of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, to consummate the GIP Purchase;
Whether ACMP will produce sufficient cash flows following the GIP Purchase to provide
the level of cash distributions we expect; ACMP’s reliance on a limited
number of customers for a substantial majority of its revenues; Whether any
nationally-recognized credit rating agency issues a decrease in our credit ratings or the credit ratings of ACMP or WPZ;
Our ability to achieve our expected increases in the levels of quarterly
dividends; Potential fluctuations in the market prices of WPZ’s or
ACMP’s common units following our announcement of the Proposed Merger;
Approval of the Proposed Merger, including by the conflicts committees of ACMP and
WPZ; Our
ability
to
successfully
integrate
the
businesses
of
ACMP
and
WPZ
in
order
to
achieve
the
expected
benefits
of
the
Proposed
Merger;
Our ability to recover expected insurance proceeds related to the Geismar
plant; Whether we have sufficient cash to enable us to pay current and expected
levels of dividends; Availability of supplies, market demand and volatility of
prices; Inflation,
interest
rates,
fluctuation
in
foreign
exchange
rates,
and
general
economic
conditions
(including
future
disruptions
and
volatility
in
the
global
credit markets and the impact of these events on our customers and suppliers);
The strength and financial resources of our competitors and the effects of
competition; Whether we are able to successfully identify, evaluate and execute
investment opportunities; Our ability to acquire new businesses and assets and
successfully integrate those operations and assets into our existing businesses, as well as
successfully expand our facilities;
Development of alternative energy sources;
The
impact
of
operational
and
development
hazards
and
unforeseen
interruptions;
Costs of, changes in, or the results of laws, government regulations (including
safety and environmental regulations), 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 and counterparties;
Risks
related
to
financing,
including
restrictions
stemming
from
our
debt
agreements,
future
changes
in
our
credit
ratings
and
the
availability
and
cost
of capital;
The amount of cash distributions from and capital requirements of our investments and
joint ventures in which we participate; Risks associated with weather and
natural phenomena, including climate conditions; Acts of terrorism, including
cybersecurity threats and related disruptions; and Additional risks described
in our filings with the Securities and Exchange Commission. Forward-looking
Statements (continued) •
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Forward-looking statements are based on numerous assumptions, uncertainties and
risks that could cause future events or results to be materially different from
those stated or implied in this report. Many of the factors that will determine
these results are beyond our ability to control or predict. Specific factors
that could cause actual results to differ from results contemplated by the
forward-looking statements include, among others, the following: |
 ©
2014 The Williams Companies, Inc. All rights reserved.
4
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. We
disclaim any obligations to and do not intend to update the above list or to
announce publicly the result of any revisions to any of the forward-looking
statements to reflect future events or developments. In
addition
to
causing
our
actual
results
to
differ,
the
factors
listed
above
may
cause
our
intentions
to
change
from
those
statements
of
intention
set
forth
in
this
announcement.
Such
changes
in
our
intentions
may
also
cause
our
results
to
differ.
We
may
change
our
intentions,
at
any
time
and
without
notice,
based upon changes in such factors, our assumptions, or otherwise.
Investors are urged to closely consider the disclosures and risk
factors in our annual report on Form 10-K filed with the SEC on Feb. 26, 2014,
and each of our quarterly reports on Form 10-Q available from our offices
or from our website at www.williams.com. Forward-looking Statements
(continued) |
 ©
2014 The Williams Companies, Inc. All rights reserved.
5
Williams
Announces
Acquisition
of
Additional
Interests
in
ACMP
Williams has agreed to acquire the 50% general partner interest and 55.1 million
limited partner units in Oklahoma City-based Access Midstream Partners, LP
(NYSE: ACMP) held by certain Global Infrastructure Partners funds
(“GIP”) for $5.995 billion in cash Note:
1
Dividends and distributions subject to respective board approval
2
A more detailed schedule reconciling this non-GAAP measure is provided in this
presentation Increasing
Access
Midstream
Partners
ownership
to
100%
of
GP
and
50%
of
LP
via
acquisition
Planning
Williams
3Q
2014
dividend
up
32%
1
to
$0.56
1
,
or
$2.24
1
on
an
annualized
basis;
$2.46
1
for
2015,
with
follow-on
annual
dividend
growth
of
approximately
15%
1
through
2017
Accelerating transformation of Williams to pure-play GP holding-company
structure Proposing
subsequent
merger
of
Williams
Partners
and
Access
Midstream
Partners;
if
consummated,
creates
industry-leading
MLP
with
expected
2015
adjusted
EBITDA
2
of
approximately
$5
billion,
strong
coverage
and
10%
1
-
12%
1
annual
LP
distribution
growth
rate
through 2017
Expecting
2015
distributions
for
merged
MLP
to
be
at
least
25%
1
above
Access
Midstream
Partners’
current
2015
distribution
guidance;
up
more
than
40%
1
vs.
current
2014
Guidance
Acquisition of Access Midstream GP and LP interests is subject to regulatory
approvals and not contingent on the merger of the two partnerships
|
 ©
2014 The Williams Companies, Inc. All rights reserved.
6
WMB to Become One of the Largest Publicly
Traded General Partner Holding Companies
NYSE: WMB
NYSE: ACMP
NYSE: WPZ
100% of GP Interest,
IDRs
100% of GP Interest,
IDRs
50% LP
Interest
64% LP
Interest
Public
Unitholders
Public
Unitholders
50% LP
Interest
36% LP
Interest
WMB expects to gain full control of ACMP with an enhanced growth
profile
and the ability to recognize benefits from simplifying the ACMP ownership
structure |
 ©
2014 The Williams Companies, Inc. All rights reserved.
7
Transaction Highlights
•
Williams expects the acquisition to increase fee-based revenues to more than
80% of its gross margin as a result of Access Midstream Partners’
fee-based revenues
•
The
acquisition
is
expected
to
increase
Williams’
cash
flow
per
share
as
a
result
of
rapid
growth in Access Midstream Partners’
business, which drives attractive growth in its
GP / IDR and LP cash distributions
•
In
connection
with
this
acquisition,
Williams
expects
to
receive
tax
benefits
consistent
with
those recognized from the December 2012 initial investment in Access Midstream
Partners •
Williams
expects
the
acquisition
to
deliver
immediate
and
future
dividend
growth
for
Williams’
shareholders and to further enhance its presence in attractive growth basins
•
Williams plans to fund approximately half of the $5.995 billion acquisition with
equity and the remainder with a combination of long-term debt, revolver
borrowings and cash on hand •
To complete Williams’
transition to a pure-play GP holding company, Williams plans to
accelerate the drop-down of remaining NGL & Petchem Services assets and
projects to late 2014 or early 2015
•
The proposed merger of Williams Partners and Access Midstream Partners, if
consummated, would create an industry-leading, large-scale MLP with
substantial positions across the midstream business
|
 ©
2014 The Williams Companies, Inc. All rights reserved.
8
Our Strategy –
More Relevant Than Ever
Big Picture
•
Be
the
premier
provider
of
reliable
large-scale
infrastructure
designed
to
maximize
the
opportunities
created by the vastly greater supply of natural gas and natural gas products now
known to exist in North America's unconventional resource plays
Underpinned by Scale, Competitive Advantage
•
Be
big
–
the
No.
1
or
2
largest
–
in
gathering,
processing
and
transportation
in
basins
and
markets
where we operate
•
Grow position in areas where we have unique competitive advantages
•
Maximize returns in established markets where we have the No. 1 or No. 2
position Strategy is Well-Aligned with the Commodity Environment
•
Well-positioned to capture current opportunities associated with ethane
cracking •
Rapidly growing fee-based business
•
Low
prices
grow
demand
in
natural
gas,
NGLs,
olefins
–
all
infrastructure-constrained
•
Natural gas products price-advantaged against crude and naptha products
Today's announcement further enhances our ability to execute on our strategy
|
 ©
2014 The Williams Companies, Inc. All rights reserved.
9
Fortifies WMB's Impressive Footprint with Assets
in Major Supply Basins Across the U.S. |
 ©
2014 The Williams Companies, Inc. All rights reserved.
10
Well-Positioned to Benefit From Supply Growth
NATURAL GAS –
U.S. SUPPLY GROWTH (Bcf/d)
Note: Excludes Canadian import volumes of
approximately 4.5 Bcf/d (at 2014 levels) Source: Wood
Mackenzie North America Gas Service •
Leadership position in major supply basins across the U.S.
•
Strengthens position as the premier natural gas infrastructure player in the U.S.,
with gas gathering volumes directly operated doubling
|
 ©
2014 The Williams Companies, Inc. All rights reserved.
11
Acquisition Expected to be Significantly
Accretive to Williams' Dividend per Share
•
Expected to result in growing GP and LP distributions, creating additional cash
coverage and providing for higher / sustained dividend growth
•
Williams
plans
to
increase
its
third-quarter
2014
dividend
32%
1
to
$0.56
1
,
or
$2.24
1
on
an
annualized
basis,
with
annual
dividend
growth
thereafter
of
approximately
15%
1
through
2017
Williams expects the transaction to close in Q3 2014
•
Targeting
2015
dividend
of
approximately
$2.46
1
per
share,
representing
an
increase
of
$0.35,
or
16.6%, from our 2015 guidance of $2.11
Quarterly Dividends
Annual Dividends
Note:
1
Dividends subject to board approval
$0.4250
$0.4475
$0.4700
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
Q2 2014A
Q3 2014E
Q4 2014E
$0.78
$1.20
$1.44
$1.75
$2.11
$2.54
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
2011A
2012A
2013A
2014E
2015E
2016E
2017E
Actuals and Previous Guidance
New Guidance |
 ©
2014 The Williams Companies, Inc. All rights reserved.
12
In
addition
to
WMB's
acquisition
of
GIP's
interests
in
ACMP,
WMB
is
seeking
to merge
WPZ and ACMP creating a premier, large-cap MLP with industry leading scale and
diversification
Natural Gas Pipelines: Transco, Northwest and Gulfstream represent the nation's
premier interstate pipeline Natural Gas Gathering and Processing:
Large-scale positions in growing natural gas supply areas in major NGL
and Petrochemical Services: Unique downstream presence on Gulf Coast and in western Canada
•
Assuming the merger is consummated in 2014, the merged MLP is expected to have a
2015 distribution increase of at
least
25%
1
above
Access
Midstream
Partners’
current
guidance
of
$2.79
1
per
unit
up
more
than
40%
1
vs.
current
2014
Guidance,
with
a
best-in-class
distribution
growth
rate
of
10%
1
to
12%
1
through
2017
and
strong
coverage
•
Williams expects the merged partnership will be a synergistic business combination
that is well-positioned to benefit from the ongoing energy
infrastructure super-cycle with an operating footprint that connects the best supplies with
the best markets
•
Combines the stability of Access Midstream Partners' current contract portfolio
with Williams Partners' enhanced long-term growth opportunities and
development expertise •
Acquisition of Access Midstream GP and LP interests is subject to regulatory
approvals and not contingent on the merger of the two partnerships
3
2
1
Note:
1
Distributions subject to board approval
Proposed WPZ / ACMP Merger Creates Premier
MLP
system
shale and unconventional producing areas
provides differentiated long-term growth
•
Creates one of the largest MLPs with leading positions across the three key
components of the midstream sector: |
 ©
2014 The Williams Companies, Inc. All rights reserved.
13
Expected Proposed Merger Benefits to ACMP
•
Significantly broadened customer base, enhanced business platform, expanded
technical and operational expertise, and additional opportunities to sustain
long-term growth •
If the proposed merger is consummated in 2014:
Expected
increase
in
2015
distributions
of
at
least
25%
1
above
Access
Midstream
Partners’
current
2015
distribution
guidance.
This
represents
an
increase
of
more
than
40%
1
above
current
2014
distribution guidance
Expected
increase
in
2016
distributions
of
at
least
20%
1
above
Access
Midstream
Partners’
current
2016 distribution guidance
Expected
best-in-class
10%
1
to
12%
1
annual
distribution
growth
rate
in
each
2016
and
2017
Distribution
coverage
2
is
estimated
to
be
approximately
1.2x
in
2015
and
at
or
above
1.1x
through
2017
•
Expected to improve credit ratings to strong BBB investment grade levels which
lowers debt cost and increases access to capital
•
Expected to increase trading liquidity and broaden appeal to investors as a core
MLP holding Note:
1
Distributions subject to board approval
2
A definition of this non-GAAP measure is provided in this presentation
|
 ©
2014 The Williams Companies, Inc. All rights reserved.
14
Expected Proposed Merger Benefits to WPZ
•
Expected increased scale and diversification with substantial operating footprint
in major supply-growth basins in the U.S., creating one of the most
substantial growth platforms in the industry
•
Significantly broadens customer base, enhances business platform, expands technical
and operational expertise, and drives opportunities to sustain long-term
growth •
Proposed merger exchange ratio of 0.85 Access Midstream Partners
units for each Williams
Partners unit would provide unitholders with an expected immediate premium
Williams Partners unitholders will also have the option to take either a
one-time special payment of $0.81 per unit, or an equivalent
value of additional common units of Access Midstream Partners, to
compensate
for
a
lower
expected
per
unit
LP
cash
distribution
in
2015
•
Williams Partners unitholders will receive Access Midstream Partners units with pro
forma best-in-class
distribution
growth
and
significant
cash
coverage
–
with
the
combined
MLP
expected to benefit from attractive equity valuation
•
Stronger
credit
profile
expected
upon
integration
of
Access
Midstream
Partners’
100%
fee-based business
Note:
1
Distributions subject to board approval
1 |
 ©
2014 The Williams Companies, Inc. All rights reserved.
15
Expected Proposed Merger Benefits to WMB
•
Provides opportunity to enhance and streamline operations,
business-development, commercial and support capabilities
•
Further simplifies the corporate structure
•
Aligns Williams Partners and Access Midstream Partners unitholders
•
Expected to increase efficiency in capital allocation to growth opportunities
•
Increased growth visibility expected to drive higher Williams valuation
|
 ©
2014 The Williams Companies, Inc. All rights reserved.
16
•
Williams expects the acquisition to increase fee-based revenues to more than
80% of its gross margin as a result of Access Midstream Partners’
fee-based revenues
•
The
acquisition
is
expected
to
increase
Williams’
cash
flow
per
share
as
a
result
of
rapid
growth in Access Midstream Partners’
business, which drives attractive growth in its
GP / IDR and LP cash distributions
•
In
connection
with
this
acquisition,
Williams
expects
to
receive
tax
benefits
consistent
with
those recognized from the December 2012 initial investment in Access Midstream
Partners •
Williams
expects
the
acquisition
to
deliver
immediate
and
future
dividend
growth
for
Williams’
shareholders and to further enhance its presence in attractive growth basins
•
Williams plans to fund approximately half of the $5.995 billion acquisition with
equity and the remainder with a combination of long-term debt, revolver
borrowings and cash on hand •
To complete Williams’
transition to a pure-play GP holding company, Williams plans to
accelerate the drop-down of remaining NGL & Petchem Services assets and
projects to late 2014 or early 2015
•
The proposed merger of Williams Partners and Access Midstream Partners, if
consummated, would create an industry-leading, large-scale MLP with
substantial positions across the midstream business
Summary Benefits |
   Non-GAAP Disclaimer
©
2014 The Williams Companies, Inc. All rights reserved.
|
 ©
2014 The Williams Companies, Inc. All rights reserved.
18
This
presentation
includes
combined
adjusted
EBITDA
for
Williams
Partners
and
Access
Midstream
Partners
for
2015
and
cash
distribution
coverage ratio, which are non-GAAP financial measures as defined under the rules
of the SEC. For
Williams
Partners
L.P.
we
define
adjusted
EBITDA
as
net
income
(loss)
attributable
to
partnership
before
income
tax
expense,
net
interest
expense, depreciation and amortization expense, equity earnings from investments and
allowance for equity funds used during construction, adjusted for equity
investments cash distributions to partnership and certain other items management believes affect the comparability of
operating results.
Access
Midstream
Partners
defines
adjusted
EBITDA
as
net
income
(loss)
before
income
tax
expense,
interest
expense,
depreciation
and
amortization
expense
and
certain
other
items
management
believes
affect
the
comparability
of
operating
results.
For
Williams
Partners
L.P.
we
also
calculate
the
ratio
of
distributable
cash
flow
to
the
total
cash
distributed
(cash
distribution
coverage
ratio).
This measure reflects the amount of distributable cash flow relative to our cash
distribution. We define distributable cash flow as net income plus
depreciation and amortization and cash distributions from our equity investments less our earnings from our equity investments,
income attributable to noncontrolling interests and maintenance capital expenditures.
We also adjust for payments and/or reimbursements under omnibus agreements
with Williams and certain other items. This
presentation
is
accompanied
by
a
reconciliation
of
adjusted
EBITDA
to
its
nearest
GAAP
financial
measure.
Management
uses
this
financial measure because it is an accepted financial indicator used by investors to
compare company performance. In addition, management believes that this
measure provides investors an enhanced perspective of the operating performance of the partnership's assets and the cash
that
the
business
is
generating.
Adjusted
EBITDA
is
not
intended
to
represent
cash
flows
for
the
period,
nor
is
it
presented
as
an
alternative
to net income or cash flow from operations. It should not be considered in isolation
or as substitutes for a measure of performance prepared in accordance with
United States generally accepted accounting principles Non-GAAP
Disclaimer |
 ©
2014 The Williams Companies, Inc. All rights reserved.
19
Net Income After Tax Reconciliation to Adjusted
EBITDA
Williams
Access
Partners
Midstream
Combined*
Low
High
Low
High
Low
High
Net income after tax attributable to partnership
1,755
$
2,105
$
470
$
645
$
Net interest expense
645
665
225
175
Income tax expense
45
55
5
5
Equity earnings from investments
(310)
(340)
-
-
Equity investments cash distributions to partnership
360
400
-
-
Depreciation & amortization (DD&A)
1,010
1,060
550
525
Equity allowance for funds used during construction
(90)
(100)
-
-
Adjusted EBITDA attributable to partnership
3,415
$
3,845
$
1,250
$
1,350
$
4,665
$
5,195
$ |