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Energy Transfer Equity versus Williams Companies

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Sep. 20 2018, Published 11:06 a.m. ET

Energy Transfer Equity and Williams Companies

As crude oil prices continue to improve, oil and gas explorers are ramping up production, which drives the demand for transportation infrastructure. In this series, we’ll compare two midstream infrastructure providers—Energy Transfer Equity (ETE) and Williams Companies (WMB). We’ll compare their recent operating and market performance. We’ll see which company is placed better for the future.

Williams Companies is mainly involved in natural gas gathering and interstate natural gas transportation. Energy Transfer Equity is a diversified midstream company involved in most midstream activities related to gas and liquids including gathering, processing, fractionation, transportation, storage, and logistics.

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Market performance

Energy Transfer Equity stock has fallen ~2%, while Williams Companies stock has fallen ~10% in 2018. The Alerian MLP ETF (AMLP), an ETF of the 25 largest MLPs, has fallen ~2% during the same period. Broader markets continue to reach new highs. Broader markets have risen more than 8% in 2018.

Williams Companies simplified its organizational structure in the second quarter. Williams Companies acquired Williams Partners. Along similar lines, Energy Transfer Equity announced an agreement to buy Energy Transfer Partners (ETP) in August. Acquisitions usually strengthen the balance sheet. A simplified ownership structure lowers the cost of equity capital due to the elimination of IDRs. Other midstream giants that have simplified their ownership in the past include Kinder Morgan (KMI) and ONEOK (OKE).

Next, we’ll discuss how Energy Transfer Equity and Williams Companies’ and returns fared against each other.

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