Williams Companies Reports Strong Third-Quarter Performance, Boosts 2024 Guidance

The Williams Companies, Inc. (WMB) announced adjusted earnings per share of 43 cents for the third quarter of 2024, slightly surpassing the Zacks Consensus Estimate of 42 cents. Although the bottom line decreased from last year’s figure of 45 cents, this was largely due to challenges in the Northeast G&P Segment. Notably, the Transmission & Gulf of Mexico and West segments performed well year-over-year, contributing to the overall success.

The Tulsa, OK-based oil and gas storage and transportation company generated revenues of $2.7 billion, exceeding the Zacks Consensus Estimate by $6 million and showing an increase from $2.6 billion in the previous year. This growth can be attributed to higher service revenues.

Key Developments and Future Plans

Williams made notable advancements in several projects this quarter. The company successfully launched Transco’s Regional Energy Access ahead of schedule on August 1, completed Mountain West’s Uinta Basin expansion, and initiated services for a segment of Transco’s Southside Reliability Enhancement.

Additionally, the Anchor facility came online, Whale in the Deepwater Gulf of Mexico was completed, and construction began on Transco’s Commonwealth Energy Connector. The firm also received favorable rulings to start the Louisiana Energy Gateway project and began two solar projects in the Northeast, collaborating with a Florida utility for the Lakeland Solar project.

In terms of regulatory progress, Williams received the Federal Energy Regulatory Commission (FERC) certificate for the Mountain West Overthrust Westbound expansion and filed for approval for Transco’s Southeast Supply Enhancement project. Furthermore, agreements for the Dalton Lateral Expansion II on Transco and new expansions on Northwest Pipeline will add a total of 260 million cubic feet per day of capacity.

WMB’s Financial Highlights

The company recorded adjusted EBITDA of $1.7 billion, representing a 3% increase from the previous year, largely driven by contributions from recent acquisitions and expansion projects. Cash flow from operations reached $1.2 billion, a 0.7% rise compared to the third quarter of 2023.

Segment Performance Breakdown

Transmission & Gulf of Mexico: The segment reported adjusted EBITDA of $830 million, reflecting a significant increase of 10.1% compared to last year, fueled by transmission expansions and the Gulf Coast Storage acquisition.

West: Focusing on gathering and processing assets in the Western United States, this segment’s adjusted EBITDA totaled $330 million, up 4.8% from the prior year, thanks to acquisitions in the DJ Basin and increased operations in NGL services.

Northeast G&P: This segment posted adjusted EBITDA of $484 million, a slight drop of 0.2% from $485 million in the year-ago quarter, mainly due to lower gathering volumes.

Gas & NGL Marketing Services: This unit’s adjusted EBITDA fell to $4 million, down from $16 million in the previous year, primarily due to reduced dry-gas marketing margins.

Cost and Future Projections

In the reported quarter, total costs and expenses rose to $1.8 billion, an increase of nearly 16% from the year-ago figure. Capital expenditures (CapEx) for the quarter also stood at $1.8 billion. By September 30, 2024, Williams reported cash and cash equivalents of $762 million and long-term debt of $24.8 billion, equating to a debt-to-capitalization ratio of 62.5%.

Guidance Highlights:

Williams has raised its 2024 adjusted EBITDA forecast to a range of $7 billion to $7.15 billion, reflecting an increase of $125 million to the guidance midpoint. The company continues to expect growth capex to be between $1.45 billion and $1.75 billion and maintenance capex between $1.1 billion and $1.3 billion, including $350 million earmarked for emissions reduction and modernization efforts.

For 2025, Williams anticipates adjusted EBITDA to be between $7.2 billion and $7.6 billion, with growth capex projected between $1.65 billion and $1.95 billion. Maintenance capex is expected to be $750 million to $850 million, including $100 million for emissions and modernization.

It’s noteworthy that the company expects a leverage ratio midpoint of 3.80x for 2024 and plans to increase its dividend by 6.1%, raising it from $1.79 per share in 2023 to $1.90 in 2024.

WMB currently holds a Zacks Rank #2 (Buy).

Recent Energy Earnings Overview

As earnings season progresses, several crucial energy companies have reported their results. Here’s a brief overview:

Liberty Energy (LBRT), based in Denver, CO, announced adjusted net income of 45 cents per share, which fell short of the Zacks Consensus Estimate of 55 cents, attributed to weaker execution and lower activity in the quarter. The bottom line also decreased from 86 cents in the same quarter last year due to rising costs.

Ahead of its earnings announcement, LBRT’s board declared a dividend of 8 cents per common share, payable on December 20 to stockholders of record as of December 6. This marks a 14% increase from the previous dividend of 7 cents per share. In this quarter, Liberty returned $51 million to shareholders through share repurchases and cash dividends.

Energy infrastructure provider Kinder Morgan, Inc. (KMI) reported third-quarter adjusted earnings per share of 25 cents, missing the Zacks Consensus Estimate of 27 cents. The results remained flat year-over-year, primarily due to lower contributions from its Products Pipelines and CO2 segments.

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Kinder Morgan Dividends Rise, Schlumberger Beats Earnings Estimates

Kinder Morgan, Inc. (KMI) has announced a quarterly cash dividend of 28.75 cents per share for the third quarter of 2024, which translates to an annualized dividend of $1.15. This marks an increase of 2% from the previous year’s third-quarter dividend. Shareholders will receive their payouts on November 15, 2024, provided they are on record by October 31.

Schlumberger Limited (SLB), a Houston-based provider of oil and gas equipment and services, has reported third-quarter earnings of 89 cents per share, excluding charges and credits. This result surpassed the Zacks Consensus Estimate of 88 cents and showed growth from last year’s 78 cents. The company attributed its success to broad earnings growth and improved margins, particularly in regions such as the Middle East, Asia, and offshore North America. Key factors included operational cost optimization and increased use of digital solutions.

Moreover, Schlumberger’s third-quarter free cash flow reached $1.81 billion. By September 30, the company held around $4.46 billion in cash and short-term investments. However, it reported a long-term debt of $11.86 billion at the close of the quarter.

Exploring the Clean Energy Shift

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With trillions of dollars now being invested in clean energy initiatives such as solar power and hydrogen fuel cells, emerging leaders in this sector may prove to be exciting stock opportunities.

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For further analysis, see: Williams Companies, Inc. (WMB): Free Stock Analysis Report

Schlumberger Limited (SLB): Free Stock Analysis Report

Kinder Morgan, Inc. (KMI): Free Stock Analysis Report

Liberty Energy Inc. (LBRT): Free Stock Analysis Report

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