01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
Williams Companies, Inc. (WMB) reported its 2009 annual results, highlighting significant operational and strategic activities.
The company focused on natural gas exploration, production, gathering, processing, and transportation, with operations concentrated in key regions of the U.S. and Canada. A major strategic restructuring was completed in February 2010, involving the contribution of a substantial majority of domestic midstream and gas pipeline businesses into Williams Partners L.P. (WPZ).
This move aimed to lower capital costs, improve access to capital markets, and support future growth initiatives. The company's financial performance in 2009 was impacted by the challenging economic environment and lower energy commodity prices, leading to decreased revenues and operating income compared to 2008. Despite the economic headwinds, Williams continued to invest in its core assets, particularly in the Exploration & Production segment, and maintained a strong liquidity position throughout the year, underscoring its resilience and strategic focus on long-term value creation.
02—Key points
Key Highlights
- Completed a significant strategic restructuring in February 2010 by contributing major midstream and gas pipeline assets to Williams Partners L.P. (WPZ) to enhance capital access and reduce costs.
- Exploration & Production segment faced lower revenues and profits due to a 35% decrease in net realized average prices, although production volumes increased by 8%.
- Gas Pipeline segment saw slightly decreased revenues and profits, with a focus on completing and advancing several expansion projects across its Transco and Northwest Pipeline systems.
- Midstream segment experienced a substantial revenue decline (33%) primarily due to lower NGL and olefin prices and volumes, but margins improved sequentially through the year.
- Gas Marketing Services segment reported an unfavorable operating result with lower realized margins on storage contracts, impacted by broader market conditions.
- The company maintained liquidity, with approximately $1.9 billion in cash and cash equivalents and $2.1 billion in available credit capacity at year-end 2009.
- Adopted new SEC oil and gas reporting rules, which influenced proved reserve estimations by utilizing a 12-month average price and revised guidance for proved undeveloped reserves.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $5.28B$11.89B | −55.6% |
| SG&A Expenses | $330.00M$504.00M | −34.5% |
| Operating Income | $1.11B$2.53B | −56.3% |
| Interest Expense | $592.00M$592.00M | 0.0% |
| Net Income | $285.00M$1.42B | −79.9% |
| EPS (Basic) | $0.49$2.44 | −79.9% |
| EPS (Diluted) | $0.49$2.40 | −79.6% |
| Shares Outstanding (Basic) | 581.67M581.34M | +0.1% |
| Shares Outstanding (Diluted) | 585.96M592.72M | −1.1% |
05—Questions
Frequently Asked Questions
What was the impact of the 2010 strategic restructuring on Williams Companies?
Williams completed a strategic restructuring in February 2010 by contributing most of its domestic midstream and gas pipeline businesses into Williams Partners L.P. (WPZ). This was intended to lower capital costs, improve access to capital markets, and facilitate future growth. As part of this, Williams retired $3 billion of debt and paid $574 million in premiums.
How did the company's financial performance fare in 2009 compared to 2008?
Williams experienced a significant decline in financial performance in 2009 compared to 2008, primarily due to lower energy commodity prices, which began to fall sharply in late 2008 and impacted the full year 2009. Revenues decreased, and net income attributable to The Williams Companies, Inc. fell from $1.418 billion in 2008 to $285 million in 2009.
What were the key drivers for the Exploration & Production segment's results in 2009?
The Exploration & Production segment's revenues decreased by 29% and segment profit by 67% in 2009 compared to 2008. This was primarily driven by a 35% decrease in net realized average prices for natural gas, although production volumes increased by 8%. The segment also incurred $32 million in penalties for early termination of drilling rig contracts and $20 million in impairment charges.
How did the adoption of new SEC oil and gas reporting rules affect the company?
Williams adopted new SEC rules for oil and gas reporting, which included using a 12-month average price (instead of a single-day, period-end price) for reserve estimations and revising guidance for proved undeveloped reserves. This change resulted in a lower reported reserve value for 2009 compared to 2008 and impacted the calculation of depreciation, depletion, and amortization.
06—Continue