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Which Segment Will Drive Williams Partners’ 1Q17 Performance?

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Atlantic Gulf segment

Williams Companies (WMB) operates as a GP (general partner) of Williams Partners (WPZ) with very few business assets. Having said that, in this article, we’ll look at Williams Partners’ operating performance by segment. Williams Partners’ Atlantic Gulf segment, which mainly provides natural gas transportation, gathering, and processing services, is WPZ’s largest business segment. It alone comprised 40.3% of the company’s total adjusted EBITDA in 4Q16. The segment’s 1Q17 performance is expected to be driven by expansion projects placed into service and strong natural gas demand.

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Central segment

The Central segment mainly provides natural gas gathering and processing services. The segment might experience a YoY decline in 1Q17 EBITDA, resulting from a decline in natural gas production in some of the regions where the segment has core dedications.

NGL & Petchem Services segment

NGL & Petchem Services segment is involved in olefins production, NGLs (natural gas liquids) transportation and marketing, and other midstream services. The segment’s 1Q17 performance could be impacted by Williams’ sale of Canadian businesses. This impact might be slightly offset by higher olefins margins at the Geismar plant. The partnership recently announced the sale of its Geismar plant to Nova Chemicals. We’ll look into this topic more in a later part of this series.

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Northeast G&P segment

The Northeast G&P provides gathering and processing services in the Marcellus and Utica shale regions. The segment’s performance in 1Q17 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 NGLs margins resulting from lower NGLs prices. However, the recent recovery in NGLs prices and increased volumes might boost the segment’s performance in 1Q17. Enable Midstream Partners (ENBL), NGL Energy Partners (NGL), and Midcoast Energy Partners (MEP) are among the midstream companies with exposure to NGL prices.

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