Which Segment Drove Williams Partners’ 2Q17 Performance?



Williams Partners’ Atlantic Gulf segment

Williams Partners’ (WPZ) Atlantic Gulf segment, which mainly provides natural gas transportation, gathering, and processing services, was WPZ’s top performing segment in 2Q17. The segment posted adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) growth of 25.5% in 2Q17, mainly driven by expansion projects placed into service in 2016 and the first half of 2017 and a higher contribution from joint venture ownerships, including a 51.0% interest in Gulfstar One and a 60.0% interest in the Discovery pipeline. The projects placed into service during 2017 include the Hillabee Phase 1, Gulf Trace, and, most recently, the Dalton Expansion.
segment ebitda

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Williams Partners’ West segment

The West segment posted a YoY (year-over-year) adjusted EBITDA fall of $52.0 million, or ~14.0%, in 2Q17. The segment’s weak performance was mainly driven by a decline in natural gas–gathering throughput volumes in some regions, including the Eagle Ford Shale, the Barnett Shale, and the Niobrara Shale. Energy Transfer Partners (ETP), Crestwood Equity Partners (CEQP), and EnLink Midstream Partners (ENLK) are among the midstream companies that have high exposure to the Eagle Ford and Barnett shales.

Moreover, the segment was impacted by the sale of its 50.0% interest in the Delaware Basin gas gathering system. The above declines were partially offset by lower SG&A (selling, general, and administrative) and O&M (operation and maintenance) expenses.

Williams Partners’ Northeast G&P segment

Williams Partners’ Northeast G&P segment provides natural gas gathering and processing and NGL (natural gas liquids) fractionation in the Marcellus and Utica shale regions. The 11.7% rise in the segment’s 2Q17 adjusted EBITDA was mainly driven by a rise in equity interest in two Marcellus gathering systems.

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Williams Partners’ NGL and Petchem Services segment

Williams Partners’ NGL and Petchem Services segment, which included an 88.5% interest in the Geismar Plant until its sale on July 6, 2017, posted a 45.1% YoY fall in adjusted EBITDA during the quarter. The segment’s weak 2Q17 performance was mainly driven by a lower olefins margins at the Geismar facility. That was due to lower olefins volumes resulting from the power outage at the plant during the quarter. Moreover, the sale of Canadian Business and RGP Splitter had an impact on the segment’s 2Q17 earnings.

According to the 2Q17 earnings release, “Williams Partners does not expect significant future operating results from this segment; however, as a result of the sale of its interest in the Geismar olefins facility referenced above, the partnership expects to record a gain of approximately $1.1 billion in the third quarter of 2017.”


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