Williams Partners L.P. (WPZ) has registered second-quarter 2011 earnings of 91 cents per limited-partner unit, which surpassed the Zacks Consensus Estimate of 85 cents. The quarter’s results also improved almost 38% from the year-ago profit of 66 cents per unit.
Higher natural gas liquid (NGL) margins in its midstream business and higher fee-based revenue led to the significant year-over-year improvement.
Total revenue increased 19% year over year to $1,671 million, but failed to meet the Zacks Consensus Estimate of $1,726 million.
Notably, Williams Partners' distributable cash flow (DCF) attributable to partnership operations witnessed a substantial improvement to $397 million in the second quarter from $316 million recorded in the year-ago quarter. Superior results in the midstream business as well as the growth of the partnership through asset acquisitions in the second half of 2010 led to DCF growth.
The partnership increased its quarterly cash distribution 9% year over year to 73.25 cents per unit.
Segment Performance
Consolidated adjusted segment profit was $474 million, up 37.4% from the year-ago level of $345 million.
Gas Pipeline: The segment reported profits of $152 million, showing a modest improvement of nearly 3% year over year. Higher transportation revenues associated with expansion project which started operations in 2010 drove the improvement.
Midstream Gas & Liquids: The segment’s profits increased almost 50% year over year to $319 million, owing to higher per-unit NGL prices and margins.
Guidance
Williams Partners raised its 2011 adjusted segment profit guidance owing to higher expected per-unit NGL margins and benefits of growth capital while 2012 guidance remained unchanged. The partnership now expects its total adjusted segment profit in the range of $1,745–$2,035 million for 2011 and $1,780–$2,320 million for 2012.
Total capital expenditure is expected to be around $1,740−$2,065 million for 2011 and $1,480−$1,780 million for 2012.
Outlook
We believe William Partners is well positioned for future growth owing to its geographically diverse assets, a sizable project backlog as well as sound distribution history.
Moreover, its gas pipeline and midstream businesses continue to progress on a number of ongoing organic expansion projects, along with major growth projects in the Gulf of Mexico, Marcellus Shale and Piceance Basin. The partnership currently holds a Zacks #2 Rank, which is equivalent to a short-term Buy rating.
Williams Partners is an energy master limited partnership occupied in gathering, transportation, treating, and processing of natural gas as well as the fractionation and storage of NGLs. The general partner of the partnership is owned and managed by Williams Companies Inc. (WMB).
The partnership’s peer, Enterprise Products Partners LP (EPD) is scheduled to report its second quarter results in the coming week.
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