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All You Want to Know about Williams’s Organizational Realignment

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Williams Companies’ segments

Williams Companies (WMB) recently announced its plan to realign the company’s business segment in order to advance the company’s natural gas–focused strategy and lower costs. According to Alan Armstrong, WMB’s CEO (chief executive officer), “Williams is executing on a clearly articulated strategy to capitalize on growing natural gas demand to drive further value for stockholders, and to achieve maximum benefit, we must continually refine the way we operate the business.”

The new structure would have three operating areas compared to the existing five segments. These areas would include Atlantic-Gulf, West, and Northeast Gathering & Processing.

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The Atlantic Gulf segment

Under the reorganization, the Atlantic Gulf segment, which provides natural gas transportation, gathering, and processing services in the Gulf region, would include the NGL & Petchem Services operations in the Gulf area. Williams Partners (WPZ) has announced plans to monetize its Geismar olefins plant. It also recently announced the sale of its Canadian business.

These steps would help lower the segment’s commodity price exposure. The segment might continue to benefit from a strong natural gas demand along the Transco interstate natural gas transmission pipeline system.

The West segment

The West segment would combine the gathering assets from the existing Central segment. According to the company, it would include “all gathering systems, operations and commercial activities in the Barnett, Eagle Ford and Haynesville shales, the Mid-Continent region and Permian Basin.” It would also include the Northwest interstate gas pipeline system.

The segment’s performance was negatively impacted by lower NGLs (natural gas liquids) margins resulting from lower NGL prices in recent quarters. At the same time, the gathering assets experienced a throughput volume fall from production-related shut-ins. The segment might continue to trail the other two segments.

Enable Midstream Partners (ENBL), NGL Energy Partners (NGL), and Midcoast Energy Partners (MEP) are among the midstream companies that have exposure to NGL prices.

The Northeast Gathering & Processing segment

The Northeast Gathering & Processing segment, which provides gathering and processing services in the Marcellus and Utica shale regions, would remain unchanged. The segment’s recent performance was driven by higher gathering volumes and increased ownership in the Utica East Ohio Midstream.

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