10-QPeriod: Q2 FY2011

WILLIAMS COMPANIES, INC. Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 4, 2011For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported its financial results for the quarter and six months ended June 30, 2011. The company saw an increase in revenues driven primarily by higher energy commodity prices and volumes in its Williams Partners and Midstream Canada & Olefins segments. The Exploration & Production segment experienced mixed results with higher prices offset by lower gas management revenues. A significant strategic initiative underway is the planned separation of the company's exploration and production business through an IPO of WPX Energy, Inc. (WPX), with a subsequent spin-off to shareholders. This plan is progressing, with WPX filing registration statements. Management highlighted that the absence of substantial restructuring costs incurred in the prior year, coupled with a favorable tax benefit, significantly improved the net income from continuing operations year-over-year for the six-month period. Liquidity remains robust, with substantial cash and available credit facilities. The company reaffirmed its commitment to its business plan and value creation through disciplined investment, while acknowledging risks such as volatile commodity prices and potential delays in the WPX separation. Investors should monitor the progress of the WPX separation and the ongoing capital expenditure plans, particularly in key growth areas like the Marcellus Shale and the Gulf of Mexico.

Financial Statements
Beta
Revenue$1.98B
SG&A Expenses$78.00M
Operating Expenses$1.48B
Operating Income$460.00M
Net Income$227.00M
EPS (Basic)$0.39
EPS (Diluted)$0.38
Shares Outstanding (Basic)588.31M
Shares Outstanding (Diluted)597.63M

Key Highlights

  • 1Total revenues increased to $2.67 billion for Q2 2011 and $5.24 billion for the six months ended June 30, 2011, compared to $2.29 billion and $4.88 billion in the prior year periods, respectively, driven by higher commodity prices and volumes, particularly in the Williams Partners and Midstream Canada & Olefins segments.
  • 2The company is actively pursuing the separation of its exploration and production business through the initial public offering (IPO) of WPX Energy, Inc. (WPX), with registration statements filed.
  • 3Income from continuing operations attributable to The Williams Companies, Inc. improved significantly, with a favorable change of $566 million for the six months ended June 30, 2011, largely due to the absence of significant 2010 restructuring costs ($606 million in early debt retirement costs) and a $124 million tax benefit recognized in Q1 2011.
  • 4Net cash provided by operating activities increased by $387 million for the six months ended June 30, 2011, compared to the prior year, primarily due to improved operating results and favorable working capital changes.
  • 5Consolidated liquidity remains strong, with $1.17 billion in cash and cash equivalents and $2.55 billion in available credit capacity as of June 30, 2011.
  • 6Capital expenditures for the six months totaled $1.09 billion, with significant investments planned for major expansion projects across various segments, including the Marcellus Shale and Gulf of Mexico.
  • 7The company increased its regular quarterly dividend to $0.20 per share in April 2011, a 60% increase from the previous dividend of $0.125 per share.

Frequently Asked Questions

Williams Companies, Inc. is actively executing a plan to separate its E&P business. This involves an initial public offering (IPO) of its subsidiary, WPX Energy, Inc. (WPX), and a subsequent tax-free spin-off of the remaining interest in WPX to shareholders. This will leave Williams Companies primarily as a natural gas infrastructure company.

For the six months ended June 30, 2011, income from continuing operations improved substantially compared to the same period in 2010. This improvement was largely driven by the absence of significant restructuring costs incurred in 2010 and a favorable tax benefit recognized in early 2011. Revenues also increased year-over-year due to higher commodity prices and volumes in key segments like Williams Partners and Midstream Canada & Olefins.

Williams Companies maintains a strong liquidity position. As of June 30, 2011, the company had approximately $1.17 billion in cash and cash equivalents and access to $2.55 billion in available credit facilities, providing ample resources for operations, capital expenditures, and debt obligations.

Key risks include the potential for volatile energy commodity prices, risks associated with the execution and timing of the WPX Energy separation plan, counterparty credit and performance risks, and the impact of regulatory and environmental matters. Additionally, sustained reductions in energy commodity prices or lower-than-expected distributions from Williams Partners could impact the company's financial performance.