Which Segment Will Drive Williams Partners’ 4Q16 Performance?

Williams Partners’ segments

Williams Companies (WMB) operates as a GP (general partner) with very few business assets. So in this part of the series, we’ll look at the operating performances of Williams Partners’ (WPZ) segments. WPZ currently operates through five business segments, which will be reduced to three following the completion of its organizational realignment.

Which Segment Will Drive Williams Partners’ 4Q16 Performance?

Atlantic Gulf segment

The Atlantic Gulf segment, which mainly provides natural gas transportation, gathering, and processing services, is WPZ’s largest segment. It makes up 36.0% of the company’s total adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) in 3Q16. The segment’s 4Q16 performance is expected to be driven by expansion projects placed into service and strong natural gas demand.

Central segment

The Central segment mainly provides natural gas gathering and processing services. It might experience a YoY (year-over-year) fall in 4Q16 EBITDA as a result of production-related shut-ins in some of the regions where the segment has core dedications.

NGL & Petchem Services segment

The NGL & Petchem Services segment is involved in olefins production, NGL (natural gas liquids) transportation and marketing, and other midstream services. The segment’s 4Q16 performance would be impacted by Williams’s sale of its Canadian businesses. That could be slightly offset by higher olefins margins at the Geismar plant.

Northeast G&P segment

The Northeast G&P segment provides gathering and processing services in the Marcellus and Utica shale regions. The segment’s performance is expected to be driven by higher gathering volumes and expansion projects placed into service. We’ll look at Williams Partners’ strong focus in the Marcellus region in the next part of this series.

West segment

The West segment has been WPZ’s worst-performing segment in recent quarters. The segment’s performance has been negatively impacted by lower NGL margins resulting from lower NGL prices. However, the recent recovery in NGL prices and increased volumes might boost the segment’s performance in 4Q16.

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