Williams Companies, Inc. (the) · NYSE:WMB
Williams Companies, Inc. (the) — The Williams Companies — FY2010 Earnings Presentation
30 slides from Williams Companies, Inc. (the)'s earnings presentation, Feb 17, 2011
Slide 1: Year-End 2010 Earnings
Year-End 2010 Earnings Alan Armstrong Chief Executive Officer February 17, 2011 © 2011 The Williams Companies, Inc. All rights reserved.
Slide 2: Forward-looking statements
Forward-looking statements Our reports, filings, and other public announcements may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are "forward-looking statements" within the meaning of Section 27A of the Securities Act
Slide 3: Forward-looking statements (cont.)
Forward-looking statements (cont.) > Costs of, changes in, or the results of laws, government regulations (including climate change legislation and/or potential additional regulation of drilling and completion of wells), environmental liabilities, litigation, and rate proceedings; > Our costs and fu
Slide 4: Oil and gas reserves and resource potential disclaimer
Oil and gas reserves and resource potential disclaimer The SEC requires oil and gas companies, in filings made with the SEC, to disclose proved reserves, which are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be
Slide 5: Today's highlights
Today’s highlights > Pursuing separation into two companies > Initiating high-dividend strategy > 2010 financial results and reserves > 4Q 2010 highlights > Growth potential > Increased guidance © 2011 The Williams Companies, Inc. All rights reserved. Williams Year-End 2010 Earnings / February 17, 2
Slide 6: Separating into two companies; boosting dividend
Separating into 2 companies; boosting dividend > Creating separate E&P company – Partial IPO in 3Q 2011 – Spinoff of remaining interest in 2012 > Using IPO proceeds to pay down corporate debt – Expecting to maintain investment-grade credit ratings > Initiating high-dividend strategy – 60% increase s
Slide 7: 2010 financial results and reserves
2010 financial results and reserves > 36% increase in adjusted EPS from continuing operations > Non-cash impairment charges and restructuring costs in prior quarters drive $1.1 billion GAAP net loss for the year > Reserves at year-end – Proved reserves steady at 4.5 Tcfe – 15.9 Tcfe of proved, proba
Slide 8: 2010 year-end total proved reserves
Exploration & Production 2010 year-end total proved reserves 5,000 353 4,500 162 212 420 4,000 528 253 Bcfe 3,500 4,837 4,484 4,255 4,272 3,000 2,500 2,000 YE 2009 U.S. Acquisitions Production 5 yr Limit Other Additions YE2010 U.S. YE2010 2010 Total U.S. 2 Additional yrs Adjusted Total Reserves Revi
Slide 9: 3P U.S. and int'l reserves increase 7%
3P U.S. and int’l reserves increase 7% 2009 YE 3P reserves 2010 YE 3P reserves 14.8 Tcfe 15.9 Tcfe Reserves 2.5 2.6 5.7 5.9 1.9 1.9 4.7 5.5 Probable Possible PUD PDP Proved reserves replacement ratio of 107%. Proved, probable and possible of 15.9 Tcfe, up 7%. © 2011 The Williams Companies, Inc. All
Slide 10: 4Q highlights & recent developments
4Q highlights & recent developments > Williams Partners (WPZ) raised ~$1.0 billion in capital markets > WPZ acquired Piceance Basin gathering and processing assets from Williams for $782 million total consideration > WPZ acquired Cabot midstream assets in Susquehanna County, Penn., for $150 million
Slide 11: 86,000-acre entry into Bakken Shale
86,000-acre entry into Bakken Shale > ~85,800 net acres - concentrated position with many large contiguous blocks > 95% average working interest on leases with ~21% average royalty > Three 9,000 ft lateral wells per 2 square mile spacing unit per formation – Middle Bakken & Three Forks > We estimate
Slide 12: Growing presence in the Marcellus
Growing presence in the Marcellus > Williams Partners – Northeast Supply Link project fully subscribed – Rapid build out of Laurel Mountain Midstream – Acquired Cabot midstream assets – Expect 2.0 Bcf/d by 2013 and 2.75 Bcf/d by 2015 in gathering volumes from these systems > E&P – Gross production n
Slide 13: Commodity-price assumptions
Commodity-price assumptions NYMEX nat gas WTI Oil $6.00 $110.00 $5.50 $100.00 $5.00 $90.00 $4.50 $80.00 $4.00 $3.50 $70.00 $3.00 $60.00 2010 2011 2012 2010 2011 2012 Rockies nat gas NGL Margins & NGL to Crude Oil Relationship $6.00 $0.95 55% $5.50 $0.85 54% $5.00 $0.75 53% $4.50 $0.65 52% $4.00 $3.5
Slide 14: Outlook for strong growth
Outlook for strong growth Adjusted Diluted EPS Adjusted Segment Profit $2.50 $3,500 $2.00 $3,000 $1.50 $2,500 $1.00 $2,000 Guidance $0.50 $1,500 Midpoint 2010 2011 2012 (white dash) 2010 2011 2012 2010 Previous Capex & Investments Guidance (3Q) CFFO $4,500 2010 Actual $4,225 Results $3,725 $4,000 $3
Slide 15: Expect significant growth
Expect significant growth Adjusted Segment Profit $3,000 $2,500 $2,000 Other $1,500 E&P WPZ $1,000 $500 $0 2010 2011 2012 Notes: Dollars in millions. Based on mid-point of guidance. Adjusted segment profit is a non-GAAP measure. Reconciliations to the most relevant measures included in GAAP are prov
Slide 16: Expect to invest $4B+ in growth
Expect to invest $4B+ in growth Current Capital Expenditure Guidance; Growth Projects Dominate > $4 Billion spending 2011-2012 $4,000 2011 $4,000 2012 $3,500 $3,500 $3,000 $3,000 $2,500 $2,500 $2,000 $2,000 $1,500 $1,500 $1,000 $1,000 $500 $500 $0 $0 Maintenance of Expenditures to Growth Projects Ma
Slide 17: Expect to see WPZ growth capex above current guidance
Expect to see WPZ growth capex above current guidance Dollars in millions In guidance + Under negotiation + Potential In guidance + Under negotiation In guidance (2011 through 2015) (2011 through 2015) (2011 through 2012) Spending $4,750 – 5,750 Spending $3,500 – 4,500 Spending $1,625 – 2,075 5% 15%
Slide 18: Canadian midstream and domestic olefins capital spending outlook
Canadian midstream and domestic olefins capital spending outlook Dollars in millions In guidance + Under negotiation + Potential In guidance + Under negotiation In guidance (2011 through 2015) (2011 through 2015) (2011 through 2012) Spending $2,700 – 4,000 Spending $1,700 – 2,700 Spending $750– 950
Slide 19: $1.3 billion inventory of growth projects
$1.3 billion inventory of growth projects Jackson Prairie Phased ‟07-‟12 NE Connector Rockaway Lateral As early as Nov. „13 N Seattle Lateral NE Supply Link Nov. „12 Nov. ‟13 Keystone Connector* S Seattle Lateral TBD Nov. „12 Mid-Atlantic Connector Nov. ‟12 Pacific Connector Opal Market 85 North Gas
Slide 20: Focused growth, value strategy
Focused growth, value strategy > Two stand-alone companies in 2012 – “Williams 2012” will focus on large infrastructure that optimizes and connects North America‟s abundant natural resources to premium markets – “New E&P” will be diversified independent exploration and production company > Initiatin
Slide 21: © 2011 The Williams Companies, Inc. All rights reserved.
© 2011 The Williams Companies, Inc. All rights reserved.
Slide 22: WMB Non-GAAP Reconciliations
WMB Non-GAAP Reconciliations © 2011 The Williams Companies, Inc. All rights reserved.
Slide 23: WMB non-GAAP disclaimer
WMB Non-GAAP Reconciliations WMB non-GAAP disclaimer This presentation includes certain financial measures, adjusted segment profit, adjusted earnings and adjusted per share measures that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission. Adjusted s
Slide 24: WMB non-GAAP reconciliation schedule
WMB Non-GAAP Reconciliations WMB non-GAAP reconciliation schedule Reconciliation of Income (Loss) from Continuing Operations Attributable to The Williams Companies, Inc. to Adjusted Income (UNAUDITED) 2009 2010 (Dollars in millions, except per-share amounts) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st
Slide 25: Non-GAAP reconciliation schedule – adjusted segment profit (loss)
WMB Non-GAAP Reconciliations Non-GAAP reconciliation schedule – adjusted segment profit (loss) Reconciliation of Segment Profit (Loss) to Adjusted Segment Profit (Loss) (UNAUDITED) 2009* 2010 (Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr* 2nd Qtr* 3rd Qtr* 4th Qtr Year Segment p
Slide 26: Adjusted segment profit guidance
Corporate Adjusted segment profit guidance Dollars in millions 2011 Guidance 2012 Guidance $1,550 - 1,990 $1,675 - 2,215 Williams Partners (WPZ) 1,475 - 1,840 1,575 - 2,065 220 - 570 250 - 900 Exploration & Production 155 – 535 100 - 775 175 - 225 200 - 300 Other/Corporate 160 - 220 210 - 285 $1,950
Slide 27: Capital expenditures guidance
Corporate Capital expenditures guidance Dollars in millions 2011 Guidance 2012 Guidance $1,580 - 1,905 $1,150 - 1,450 Williams Partners (WPZ) 1,180 - 1,530 905 - 1,255 1,150 - 1,750 1,300 - 2,100 Exploration & Production 870 - 1,550 830 -1,830 380- 480 425 - 525 Other/Corporate 370 - 470 500 - 600 $
Slide 28: Segment profit guidance – reported to adjusted
WMB Non-GAAP Reconciliations Segment profit guidance – reported to adjusted Dollars in millions 2011 Guidance 2012 Guidance Low Midpoint High Low Midpoint High Reported segment profit: Williams Partners (WPZ) $ 1,550 $ 1,770 $ 1,990 $ 1,675 $ 1,945 $ 2,215 Exploration & Production 200 375 550 250 57
Slide 29: Reconciliation of forecasted reported income to adjusted income from continuing operations
WMB Non-GAAP Reconciliations Reconciliation of forecasted reported income from continuing operations to adjusted income from continuing operations Dollars in millions 2011 Guidance 2012 Guidance Low Midpoint High Low Midpoint High Reported income from continuing operations $708 $918 $1,128 $725 $1,0
Slide 30: © 2011 The Williams Companies, Inc. All rights reserved.
© 2011 The Williams Companies, Inc. All rights reserved.
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