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Analysts Expect Flat Earnings from Williams Partners in 1Q18

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1Q18 EBITDA estimates

Williams Companies (WMB) and its MLP subsidiary, Williams Partners (WPZ), are scheduled to release their 1Q18 earnings on May 2. Wall Street analysts’ 1Q18 EBITDA[1. earnings before interest, taxes, depreciation, and amortization] estimate for WPZ is ~$1.1 billion. This metric is 0.2% higher than its 1Q17 adjusted EBITDA and 2.7% lower than its 4Q17 adjusted EBITDA. 

WPZ beat its EBITDA estimate marginally in 4Q17. Its 4Q17 EBITDA estimate was ~$1.1 billion, and its adjusted EBITDA was ~$1.2 billion, a beat of 2.3%. Williams Companies’ earnings are mainly dependent on distribution income from Williams Partners. So, WPZ’s EBITDA growth drives WMB’s earnings.

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1Q18 EBITDA drivers

Williams Partners’ 1Q18 earnings could be driven by the following factors:

  • strong Transco natural gas volume growth resulting from expansion projects placed into service during the recent quarters and strong winter demand
  • higher NGLs (natural gas liquids) throughput volumes
  • higher gathering volumes in the Northeast and Haynesville regions driven by strong drilling activity in the regions

This above negatives might be offset by the following factors:

  • asset divestiture including Canadian assets and Geismar Plant
  • lower contribution from the Discovery joint venture due to decline in volumes from the Hadrian field
  • lower throughput volumes in some regions including Barnett and Eagle Ford due to weak drilling activity in those regions

Peers

Among the midstream C corporations, Kinder Morgan (KMI) recently reported its 1Q18 earnings. The US midstream giant reported 4.5% YoY growth in adjusted EBITDA in the first quarter of 2018. For an in-depth review of KMI’s 1Q18 earnings, please read Kinder Morgan’s 1Q18 Distributable Cash Flow Rises 3%.

In the next two articles, we’ll look into Williams Partners’ 1Q18 operating performance drivers. Later in the series, we’ll talk about recent distributions, valuations, technical indicators, and analyst recommendations for both the C corporation and the limited partnership.

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