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ETE versus WMB: Comparing Two Midstream Heavyweights

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ETE versus WMB

In this series, we’ll perform a comparative analysis of two midstream heavyweights, Energy Transfer Equity (ETE) and Williams Companies (WMB).

Williams Companies is mainly involved in natural gas gathering and interstate natural gas transportation. On the other hand, Energy Transfer Partners (ETP), Energy Transfer Equity’s subsidiary, is a diversified midstream MLP involved in almost all midstream activities related to gas and liquids, including gathering, processing, fractionation, transportation, storage, and logistics.

In this series, we’ll look into these companies’ recent market performances, distribution outlooks, expansion plans, and financial positions. We’ll also talk about their distribution yields, key indicators, and analyst recommendations. First, though, let’s look at their organizational structures.

Would ETE follow suit?

Williams Companies recently announced the simplification of its organizational structure. The C corporation has agreed to acquire its MLP, Williams Partners (WPZ), in an all-stock deal valued at $10.5 billion. The simplification followed the FERC’s (Federal Energy Regulatory Commission) revised income tax ruling and the recent US tax cuts. WMB’s peer Enbridge (ENB) announced similar transactions to acquire two of its limited partnerships.

Incentive distribution rights have been a burden on Energy Transfer Partners, and the impact of the FERC’s ruling on rate negotiations has led Energy Transfer Equity to explore options for the simplification of its capital structure. Such options even include a C corporation structure. For more details, read Is Energy Transfer Partners Exploring a C Corporation Structure?

We’ll analyze the market performances of these companies in the next article.

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