Why Did Williams Partners’ EBITDA Grow in 1Q16?



Williams Partners’ 1Q16 EBITDA

Williams Companies (WMB) and its MLP subsidiary, Williams Partners (WPZ), reported their 1Q16 earnings on May 4, 2016. Williams Companies’ earnings mainly depend on distribution income from Williams Partners. Therefore, Williams Partners’ EBITDA (earnings before interest, tax, depreciation, and amortization) growth drives Williams Companies’ earnings. Williams Companies’ forms 0.24% of the Guggenheim S&P 500 Equal Weight ETF (RSP).

Williams Partners’ 1Q16 EBITDA increased to $1.06 billion from $9.17 billion in 1Q15—a YoY (year-over-year) increase of 15.6%. However, the partnership missed its 1Q16 EBITDA estimate by 1.5%.

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Williams Partners’ 1Q16 EBITDA drivers

The YoY increase in Williams Partners’ 1Q16 EBITDA was mainly driven by the following factors:

  • Atlantic-Gulf Segment – The segment saw 19.1% YoY EBITDA growth in 1Q16 driven mainly by expansion projects placed into service.
  • Central – The segment includes operations “that were previously part of the former Access Midstream segment located in Louisiana, Texas, Arkansas and Oklahoma.” The segment’s 1Q16 performance was mainly driven by “higher gathering fees in the Haynesville area.”
  • NGL & Petchem Services – The segment’s adjusted EBITDA increased to $57 million in 1Q16 from $7 million in 1Q15. The YoY jump in the adjusted EBITDA was mainly driven by “higher olefins margins at the Geismar plant reflecting a full quarter of production.”
  • Northeast G&P – Northeast G&P posted 11.7% YoY EBITDA growth in 1Q16 driven by higher gathering volumes and increased ownership in Utica East Ohio Midstream. This was slightly offset by production-related shut-ins.
  • West – The West segment was Williams Partners’ worst performing segment. The segment’s performance was impacted by lower NGL (natural gas liquid) margins resulting from lower NGL (natural gas liquid) prices.

Enable Midstream Partners (ENBL), Midcoast Energy Partners (MEP), and Southcross Energy Partners (SXE) are among the midstream companies that are negatively impacted by low NGL prices.


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