As CEO of Williams in Tulsa, Alan Armstrong says the company’s second quarter earnings saw what he called “very healthy growth” in all key measures. And he has a firm belief in ” strong natural gas demand growth fundamentals that underpin our strategy.”
During a recent earnings call after the company posted its report, Armstrong said, “In general, all the metrics we want to go up, we went up by double digits and those we’ve been working to reduce, it went down.”
He noted the predictable set of cash flows made it the 14th quarter in a row that the company has been in line with Street consensus and its own guidance. Williams saw 12% growth for adjusted EBITDA for the quarter and 9% growth for the year-to-date period.
“Crisp execution on our projects continues keeping our capital spending in line with our expectations. So really nice improvement in our various earnings and cash flow metrics despite the impact of significant asset sales,” he told investors and analysts.
Williams saw a 23% increase in adjusted EBITDA in its Atlantic-Gulf sector, one driven by Transco and new expansion projects Atlantic Sunrise and the Gulf Connector.
Armstrong said Williams is also seeing a turn-around in the volumes of gas production in the Utica. But in the West, Williams production “is pretty flat to the prior year.”
However, he said a new plant at Fort Lupton has filled up for the quarter and “great growth (is) going on there in the DJ Basin.”
Still, overall West production remained flat.
“The West is down about 3% on this comparison, reflecting much lower NGL margins and the effect of severe winter weather this year on volumes in 1Q of 2019. All in all, very happy with our second quarter performance, which tracks well with our overall business plan from last fall despite the decline we’ve seen in natural gas and NGL pricing. And we are very well positioned to continue this growth here in the last half of the year.”
“Shifting now to discuss the expected growth in our Northeast G&P business, we’d like to first emphasize that we still believe in the strong natural gas demand growth fundamentals that underpin our strategy. We’ve seen continued delays in the startup of nearly all of the LNG terminals that were planned to come online in the first half of 2019, but that just means we’re going to see an even stronger pool on natural gas in the back half of this year.”
Armstrong is of the opinion that it is easy to see the natural gas demand growth outlook is “very strong” and driven by LNG export growth, continued power generation and major industrial investments that continue to come online trying to take advantage of low cost of U.S. natural gas and U.S. low cost NGL prices.
“Components in low cost U.S. natural gas reserves will continue to drive strong natural gas demand growth over the long term,” predicted Armstrong. “And as a result, we believe that there will have to be a call on natural gas focused supply areas given the continuous growth in natural gas demand and the stronger than ever capital discipline being demonstrated by the producer community.”
“Our near term, we continue to see commodity price headwinds for our producer customers in the area and we believe that producers are responding appropriately to the current market conditions, continuing to plan around or hope for higher prices would only exacerbate the length and supply. And we are also very focused on closely matching our capital programs with these latest forecasts.”