Tulsa based Williams and Williams Partners have announced they’re slashing their 2016 growth capital funding by nearly $1 billion or 32 percent from the partnership’s previous plans. The new funding goal totals $2 billion and according to the Monday announcement, the reduction in cap-ex reflects project deferrals, delays and cancellations resulting from the “current commodity price environment as well as sharply higher costs of capital.”
But Alan Armstrong, chief executive officer of Williams Partners’ general partner assures investors and urges them not to panic.
“Our strategy remains intact and the underlying fundamentals of our business are strong despite the slower growth rates producers currently face,” he said. “We continue to execute on critical demand-driven infrastructure projects that serve the long-term natural gas needs of local distribution companies, electric power generation, LNG and industrial sources.”
Armstrong said simply put, the $1 billion reduction in capital expenses addresses the realities of the current market environment while continuing to invest in the growing demand side of the business.
And he said the company intends to move ahead with completion of its merger with Dallas-based Energy Transfer Equity, L.P. , a deal that was executed in September of 2015.
Williams Partners also announced that the board of directors of the partnership’s general partner approved a distribution of $0.85 which is payable on Feb. 12, 2016 to common unitholders. The distribution is said to be consistent with the prior quarter.
The company explained that the $2 billion growth capital funding needs include $1.3 billion for Transco expansions and other interstate pipeline growth projects. Non-interstate pipeline growth capital funding needs total $700 million. Capital spending for gathering and process in the remainder of the year will be limited to known new producer volumes, including wells drilled and completed awaiting connecting infrastructure.