WMB’s and WPZ’s market performance
In this article, we’ll look at the recent updates on Williams Partners’ (WPZ) Transco expansion projects. First, let’s look into Williams Companies’ (WMB) and Williams Partners’ YTD (year-to-date) market performance numbers.
Williams Companies (WMB) has lost 1.4% since the beginning of 2017. In comparison, Williams Partners (WPZ) has gained 6.0% in 2017 year-to-date. At the same time, the Alerian MLP ETF (AMLP) has lost 0.7% while the SPDR S&P 500 ETF (SPY) (SPX-INDEX) has gained 6.7%. WMB forms 0.12% of SPY.
Williams Companies’ underperformance relative to AMLP can be attributed to the sharp decline in its stock price following its financial repositioning announcement. Williams Partners’ strong performance relative to AMLP is due to its significant expansion opportunities, recent measures to delever its balance sheet, and focus on a long-term natural gas strategy.
The partnership recently announced the sale of its Geismar Facility to Nova Chemical for $2.1 billion. The partnership also entered into a long-term agreement with Nova Chemicals to supply and transport ethane to the plant on its Bayou Ethane pipeline. The partnership expects to generate 97% of its gross margins from fee-based sources following the completion of the Geismar plant sale.
Transco project updates
Williams Partners has begun construction of Transco’s Atlantic Sunrise project. As noted in a related press release, the project is a 350 MMcfpd (million cubic feet per day) “expansion of the existing Transco natural gas pipeline to connect abundant Marcellus gas supplies with markets in the Mid-Atlantic and Southeastern U.S.” The project received FERC (Federal Energy Regulatory Commission) approval in February 2017.
The partnership has filed for its FERC certificate for the ~400 MMcfpd (million cubic feet) Northeast Supply Enhancement project. The project would supply natural gas to New York City and Long Island. Moreover, the partnership received a “strong response to non-binding open season” for its new Southeastern Trail project.
WPZ placed its Gulf Trace project into service during 1Q17. The project is meant to move ~1.2 Bcfpd (billion cubic feet per day) of natural gas serving Chenier Energy’s (LNG) Sabine Pass LNG (liquefied natural gas) export terminal.
Including Gulf Trace, the partnership expects to place five Transco expansion projects by the end of 2017. These include Dalton, Virginia Southside II, and Phase 1 of Hillabee.