Williams Reports Higher Third-Quarter Earnings Driven by Strong Business Fundamentals and Natural Gas Demand

TULSA, Okla.--()--Williams (NYSE: WMB) today announced its unaudited financial results for the three and nine months ended Sept. 30, 2022.

Upside exposure builds on stable earnings growth of base business

  • GAAP net income of $599 million, or $0.49 per diluted share
  • Adjusted net income of $592 million, or $0.48 per diluted share (Adjusted EPS)
  • Adjusted EBITDA of $1.637 billion – up $217 million or 15% vs. 3Q 2021
  • Cash flow from operations (CFFO) of $1.490 billion – up $656 million or 79% vs. 3Q 2021
  • Available funds from operations (AFFO) of $1.241 billion – up $161 million or 15% vs. 3Q 2021
  • Dividend coverage ratio of 2.40x (AFFO basis)
  • Strong operational performance with gathering volumes of approximately 17 Bcf/d and contracted transmission capacity of 24.4 Bcf/d – up 11% and 3%, respectively from 3Q 2021
  • Expect 2022 Adjusted EBITDA near high end of previously raised guidance range of $6.1 billion to $6.4 billion

Advancing clean energy strategy through project execution, acquisitions and partnerships

  • Expanded natural gas transmission and storage footprint with purchase of NorTex Midstream
  • Entered agreement with PennEnergy Resources to market and deliver low-emission next gen gas
  • Completed Gulfstream Phase VI expansion; executing slate of projects on Transco, Northeast G&P, Haynesville and Deepwater Gulf of Mexico
  • Advancing clean hydrogen commercialization strategy in Wyoming with Daroga Power agreement

CEO Perspective

Alan Armstrong, president and chief executive officer, made the following comments:

"Williams third quarter Adjusted EBITDA growth of 15% demonstrates our ability to capture upside on top of the steady growth of our base business. Williams is thriving as demand for our critical services continues to expand, and we are well positioned to excel despite the macro-economic concerns for the broader markets. Our natural gas focused strategy and long-term approach to business is built to capture upside and at the same time weather commodity price down cycles like we saw in 2020. As an organization, we are energized by the opportunity to serve this growing demand for clean, secure and affordable energy.

"With the winter heating season now upon us, the need for secure natural gas supplies on a global scale has never been more pronounced, especially as the crisis in Ukraine continues to wreak havoc on energy markets and the global economy, which depends on access to affordable energy. The United States, with our abundance of natural gas, is well positioned to bring energy security to nations in need while at the same time reducing emissions, so long as we have comprehensive energy policies that allow us to build the infrastructure to connect these low cost supplies to growing demand here at home and abroad. If we don’t deal with permitting reform, we will continue to see higher utility bills at home and the unnecessary destruction of our allies' economies."

Armstrong added, “Williams is executing a number of high-return growth projects across our portfolio to meet growing long-term natural gas demand domestically and around the world. As we bring this critical infrastructure on line to meet growing demand, we expect to see continued earnings growth and value creation for our shareholders."

Williams Summary Financial Information

3Q

 

Year to Date

Amounts in millions, except ratios and per-share amounts. Per share amounts are reported on a diluted basis. Net income amounts are from continuing operations attributable to The Williams Companies, Inc. available to common stockholders.

 

2022

 

2021

 

 

2022

 

2021

 

 

 

 

 

 

GAAP Measures

 

 

 

 

 

Net Income

$

599

$

164

 

$

1,378

$

893

Net Income Per Share

$

0.49

$

0.13

 

$

1.13

$

0.73

Cash Flow From Operations

$

1,490

$

834

 

$

3,670

$

2,806

 

 

 

 

 

 

Non-GAAP Measures (1)

 

 

 

 

 

Adjusted EBITDA

$

1,637

$

1,420

 

$

4,644

$

4,152

Adjusted Net Income

$

592

$

426

 

$

1,575

$

1,182

Adjusted Earnings Per Share

$

0.48

$

0.35

 

$

1.29

$

0.96

Available Funds from Operations

$

1,241

$

1,080

 

$

3,561

$

3,028

Dividend Coverage Ratio

2.40x

2.17x

 

2.29x

2.03x

 

 

 

 

 

 

Other

 

 

 

 

 

Debt-to-Adjusted EBITDA at Quarter End (2)

3.68x

4.04x

 

 

 

Capital Investments (3) (4) (5)

$

526

$

469

 

$

1,271

$

1,206

 

 

 

 

 

 

(1) Schedules reconciling Adjusted Net Income, Adjusted EBITDA, Available Funds from Operations and Dividend Coverage Ratio (non-GAAP measures) to the most comparable GAAP measure are available at www.williams.com and as an attachment to this news release.

(2) Does not represent leverage ratios measured for WMB credit agreement compliance or leverage ratios as calculated by the major credit ratings agencies. Debt is net of cash on hand, and Adjusted EBITDA reflects the sum of the last four quarters.

(3) Capital Investments includes increases to property, plant, and equipment (growth & maintenance capital), purchases of businesses, net of cash acquired, purchases of and contributions to equity-method investments and purchases of other long-term investments.

(4) Year-to-date 2022 excludes $933 million for purchase of the Trace Midstream Haynesville gathering assets, which closed April 29, 2022.

(5) Third quarter and year-to-date 2022 exclude $424 million for purchase of the NorTex Midstream assets, which closed August 31, 2022.

 

GAAP Measures

Third-quarter 2022 net income increased by $435 million compared to the prior year reflecting the benefit of higher service revenues from commodity-based rates, higher Haynesville gathering volumes including the Trace Acquisition, and Transco’s Leidy South project being in service, higher results from our upstream operations, as well as a favorable change of $344 million in net unrealized gains/losses on commodity derivatives. These improvements were partially offset by higher operating and administrative expenses, including higher employee-related costs. The tax provision increased due to higher pretax income, partially offset by the net benefit from a reduction in our estimated state deferred income tax rate.

Year-to-date 2022 net income increased by $485 million compared to the prior year reflecting the benefit of higher service revenues as described above, higher results from our upstream operations, and higher commodity margins. These improvements were partially offset by increased intangible asset amortization, higher operating and administrative expenses driven by the increased scale of our upstream operations and higher employee-related costs, including costs from the Sequent acquisition for the full 2022 period, and the absence of a $77 million favorable impact in 2021 from Winter Storm Uri. The tax provision changed favorably as the impact of higher pretax income was more than offset by $134 million associated with the release of valuation allowances on deferred income tax assets and federal income tax settlements in the second quarter and the net benefit from a lower estimated state deferred income tax rate in the third quarter.

Cash flow from operations for the third quarter of 2022 increased as compared to 2021 primarily due to favorable changes in margin deposits associated with commodity derivatives, favorable net changes in working capital, higher operating results exclusive of non-cash items, and higher distributions from equity-method investments. Year-to-date cash flow from operations also increased compared to 2021 driven by similar factors.

Non-GAAP Measures

Third-quarter 2022 Adjusted EBITDA increased by $217 million over the prior year, driven by the previously described benefits from service revenues and upstream operations, partially offset by higher operating and administrative costs. Year-to-date 2022 Adjusted EBITDA increased by $492 million over the prior year due to similar drivers and higher commodity margins, but also reflecting the absence of the favorable impact in 2021 from Winter Storm Uri.

Third-quarter 2022 Adjusted Income improved by $166 million over the prior year, driven by the previously described impacts to net income, adjusted primarily to remove the effects of net unrealized gains/losses on commodity derivatives, amortization of certain assets from the Sequent acquisition, certain regulatory charges, and favorable income tax benefits. Year-to-date 2022 Adjusted Income improved by $393 million over the prior year for similar reasons.

Third-quarter 2022 Available Funds From Operations (AFFO) increased by $161 million compared to the prior year primarily due to higher operating results exclusive of non-cash items and higher distributions from equity-method investments. Year-to-date 2022 AFFO increased by $533 million reflecting similar drivers.

Business Segment Results & Form 10-Q

Williams' operations are comprised of the following reportable segments: Transmission & Gulf of Mexico, Northeast G&P, West and Gas & NGL Marketing Services, as well as Other. For more information, see the company's third-quarter 2022 Form 10-Q.

 

Third Quarter

 

Year to Date

Amounts in millions

Modified EBITDA

 

Adjusted EBITDA

 

Modified EBITDA

 

Adjusted EBITDA

 

3Q 2022

 

3Q 2021

 

Change

 

 

3Q 2022

 

3Q 2021

Change

 

 

2022

 

 

2021

 

Change

 

 

2022

 

2021

Change

Transmission & Gulf of Mexico

$

638

$

630

 

$

8

 

$

671

$

630

$

41

 

$

1,987

 

$

1,936

 

$

51

 

 

$

2,020

$

1,938

$

82

 

Northeast G&P

 

464

 

442

 

 

22

 

 

464

 

442

 

22

 

 

1,332

 

 

1,253

 

 

79

 

 

 

1,332

 

1,253

 

79

 

West

 

337

 

257

 

 

80

 

 

337

 

257

 

80

 

 

885

 

 

702

 

 

183

 

 

 

893

 

702

 

191

 

Gas & NGL Marketing Services

 

20

 

(262

)

 

282

 

 

38

 

34

 

4

 

 

(249

)

 

(161

)

 

(88

)

 

 

109

 

135

 

(26

)

Other

 

140

 

38

 

 

102

 

 

127

 

57

 

70

 

 

284

 

 

91

 

 

193

 

 

 

290

 

124

 

166

 

Total

$

1,599

$

1,105

 

$

494

 

$

1,637

$

1,420

$

217

 

$

4,239

 

$

3,821

 

$

418

 

 

$

4,644

$

4,152

$

492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: Williams uses Modified EBITDA for its segment reporting. Definitions of Modified EBITDA and Adjusted EBITDA and schedules reconciling to net income are included in this news release.

Transmission & Gulf of Mexico

Third-quarter and year-to-date 2022 Modified and Adjusted EBITDA improved compared to the prior year driven by higher service revenues from Transco’s Leidy South expansion project and reduced hurricane impacts in the Gulf Coast region, partially offset by higher operating and administrative costs. Modified EBITDA for the 2022 periods was further impacted by certain regulatory and abandonment charges which are excluded from Adjusted EBITDA.

Northeast G&P

Third-quarter 2022 Modified and Adjusted EBITDA increased over the prior year driven by higher service revenues from Ohio Valley Midstream, partially offset by higher operating and administrative costs. Contributions from equity-investees increased reflecting higher commodity-based rates partially offset lower cost-of-service rates and volumes.

Both Modified and Adjusted EBITDA also improved for the year-to-date 2022 period, driven by Ohio Valley Midstream and gathering rate escalations, partially offset by higher operating and administrative costs. Net equity-investee contributions increased as previously described.

West

Third-quarter and year-to-date 2022 Modified and Adjusted EBITDA increased compared to the prior year benefiting from higher commodity-based rates and higher Haynesville gathering volumes including contributions from Trace Midstream acquired in April, partially offset by higher operating and administrative costs.

Gas & NGL Marketing Services

Third-quarter 2022 Modified EBITDA improved from the prior year primarily reflecting a $299 million net favorable change in unrealized gains/losses on commodity derivatives, which is excluded from Adjusted EBITDA. Both measures reflected stable commodity margins which included write-downs of inventory to lower period-end market prices, as well as higher administrative costs.

Year-to-date 2022 Modified EBITDA declined from the prior year primarily reflecting a $43 million net unfavorable change in unrealized loss on commodity derivatives, which is excluded from Adjusted EBITDA. Both measures were also impacted by higher commodity margins which included the impact of write-downs of inventory to lower period-end market prices, more than offset by the absence of a $58 million favorable impact in 2021 from Winter Storm Uri and higher administrative costs associated with the Sequent business acquired in July 2021.

Other

Third-quarter 2022 Modified EBITDA improved compared to the prior year primarily reflecting higher prices and volumes from our upstream operations and a $44 million net favorable change in unrealized gains/losses on commodity derivatives related to our upstream operations, which is excluded from Adjusted EBITDA.

Year-to-date 2022 Modified EBITDA also improved compared to the prior year primarily reflecting higher prices and volumes from our upstream operations and a $30 million net favorable change in unrealized gain/loss on commodity derivatives related to our upstream operations, which is excluded from Adjusted EBITDA. Both measures were also impacted by the absence of a $22 million favorable impact in 2021 from Winter Storm Uri.

2022 Financial Guidance

The company continues to expect 2022 Adjusted EBITDA near the high end of its previously announced guidance range of $6.1 billion and $6.4 billion. The company is also maintaining guidance for 2022 growth capital expenditures between $1.25 billion to $1.35 billion, which excludes approximately $1.5 billion in total acquisitions and follow-on expenditures for Trace Midstream and NorTex Midstream assets. The company is reaffirming maintenance capital expenditures between $650 million and $750 million, which includes capital for emissions reduction and modernization initiatives. Williams anticipates achieving a leverage ratio (net debt-to-Adjusted EBITDA) of approximately 3.6x, below the original guidance of 3.8x.

Williams' Third-Quarter 2022 Materials to be Posted Shortly; Q&A Webcast Scheduled for Tomorrow

Williams third-quarter 2022 earnings presentation will be posted at www.williams.com. The company’s third-quarter 2022 earnings conference call and webcast with analysts and investors is scheduled for Tuesday, Nov. 1, at 9:30 a.m. Eastern Time (8:30 a.m. Central Time). Participants who wish to join the call by phone must register using the following link: https://conferencingportals.com/event/MTgNWtxQ.

A webcast link to the conference call is available on Williams' Investor Relations website. A replay of the webcast will be available on the website for at least 90 days following the event.

About Williams

As the world demands reliable, low-cost, low-carbon energy, Williams (NYSE: WMB) will be there with the best transport, storage and delivery solutions to reliably fuel the clean energy economy. Headquartered in Tulsa, Oklahoma, Williams is an industry-leading, investment grade C-Corp with operations across the natural gas value chain including gathering, processing, interstate transportation, storage, wholesale marketing and trading of natural gas and natural gas liquids. With major positions in top U.S. supply basins, Williams connects the best supplies with the growing demand for clean energy. Williams owns and operates more than 30,000 miles of pipelines system wide – including Transco, the nation’s largest volume and fastest growing pipeline – and handles approximately 30 percent of the natural gas in the United States that is used every day for clean-power generation, heating and industrial use. Learn how the company is leveraging its nationwide footprint to incorporate clean hydrogen, next generation gas and other innovations at www.williams.com.

The Williams Companies, Inc.

Consolidated Statement of Income

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

(Millions, except per-share amounts)

Revenues:

 

 

 

 

 

 

 

Service revenues

$

1,685

 

 

$

1,506

 

 

$

4,828

 

 

$

4,418

 

Service revenues – commodity consideration

 

60

 

 

 

64

 

 

 

223

 

 

 

164

 

Product sales

 

1,260

 

 

 

1,296

 

 

 

3,475

 

 

 

3,229

 

Net gain (loss) on commodity derivatives

 

16

 

 

 

(391

)

 

 

(491

)

 

 

(441

)

Total revenues

 

3,021

 

 

 

2,475

 

 

 

8,035

 

 

 

7,370

 

Costs and expenses:

 

 

 

 

 

 

 

Product costs

 

990

 

 

 

1,043

 

 

 

2,650

 

 

 

2,672

 

Net processing commodity expenses

 

29

 

 

 

28

 

 

 

99

 

 

 

67

 

Operating and maintenance expenses

 

486

 

 

 

409

 

 

 

1,345

 

 

 

1,148

 

Depreciation and amortization expenses

 

500

 

 

 

487

 

 

 

1,504

 

 

 

1,388

 

Selling, general, and administrative expenses

 

163

 

 

 

152

 

 

 

477

 

 

 

389

 

Other (income) expense – net

 

33

 

 

 

1

 

 

 

14

 

 

 

12

 

Total costs and expenses

 

2,201

 

 

 

2,120

 

 

 

6,089

 

 

 

5,676

 

Operating income (loss)

 

820

 

 

 

355

 

 

 

1,946

 

 

 

1,694

 

Equity earnings (losses)

 

193

 

 

 

157

 

 

 

492

 

 

 

423

 

Other investing income (loss) – net

 

1

 

 

 

2

 

 

 

4

 

 

 

6

 

Interest incurred

 

(296

)

 

 

(295

)

 

 

(871

)

 

 

(892

)

Interest capitalized

 

5

 

 

 

3

 

 

 

13

 

 

 

8

 

Other income (expense) – net

 

(6

)

 

 

4

 

 

 

5

 

 

 

4

 

Income (loss) before income taxes

 

717

 

 

 

226

 

 

 

1,589

 

 

 

1,243

 

Less: Provision (benefit) for income taxes

 

96

 

 

 

53

 

 

 

169

 

 

 

313

 

Net income (loss)

 

621

 

 

 

173

 

 

 

1,420

 

 

 

930

 

Less: Net income (loss) attributable to noncontrolling interests

 

21

 

 

 

8

 

 

 

40

 

 

 

35

 

Net income (loss) attributable to The Williams Companies, Inc.

 

600

 

 

 

165

 

 

 

1,380

 

 

 

895

 

Less: Preferred stock dividends

 

1

 

 

 

1

 

 

 

2

 

 

 

2

 

Net income (loss) available to common stockholders

$

599

 

 

$

164

 

 

$

1,378

 

 

$

893

 

Basic earnings (loss) per common share:

 

 

 

 

 

 

 

Net income (loss)

$

.49

 

 

$

.14

 

 

$

1.13

 

 

$

.74

 

Weighted-average shares (thousands)

 

1,218,964

 

 

 

1,215,434

 

 

 

1,218,202

 

 

 

1,215,113

 

Diluted earnings (loss) per common share:

 

 

 

 

 

 

 

Net income (loss)

$

.49

 

 

$

.13

 

 

$

1.13

 

 

$

.73

 

Weighted-average shares (thousands)

 

1,222,472

 

 

 

1,217,979

 

 

 

1,222,153

 

 

 

1,217,558

 

The Williams Companies, Inc.

Consolidated Balance Sheet

(Unaudited)

 

 

 

September 30,
2022

 

December 31,
2021

 

 

(Millions, except per-share amounts)

ASSETS

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

859

 

 

$

1,680

 

Trade accounts and other receivables

 

 

2,674

 

 

 

1,986

 

Allowance for doubtful accounts

 

 

(15

)

 

 

(8

)

Trade accounts and other receivables – net

 

 

2,659

 

 

 

1,978

 

Inventories

 

 

447

 

 

 

379

 

Derivative assets

 

 

201

 

 

 

301

 

Other current assets and deferred charges

 

 

272

 

 

 

211

 

Total current assets

 

 

4,438

 

 

 

4,549

 

Investments

 

 

5,066

 

 

 

5,127

 

Property, plant, and equipment

 

 

46,186

 

 

 

44,184

 

Accumulated depreciation and amortization

 

 

(15,848

)

 

 

(14,926

)

Property, plant, and equipment – net

 

 

30,338

 

 

 

29,258

 

Intangible assets – net of accumulated amortization

 

 

7,493

 

 

 

7,402

 

Regulatory assets, deferred charges, and other

 

 

1,337

 

 

 

1,276

 

Total assets

 

$

48,672

 

 

$

47,612

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

2,613

 

 

$

1,746

 

Accrued liabilities

 

 

1,527

 

 

 

1,201

 

Long-term debt due within one year

 

 

877

 

 

 

2,025

 

Total current liabilities

 

 

5,017

 

 

 

4,972

 

Long-term debt

 

 

22,530

 

 

 

21,650

 

Deferred income tax liabilities

 

 

2,637

 

 

 

2,453

 

Regulatory liabilities, deferred income, and other

 

 

4,578

 

 

 

4,436

 

Contingent liabilities and commitments

 

 

 

 

Equity:

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock ($1 par value; 30 million shares authorized at September 30, 2022 and December 31, 2021; 35,000 shares issued at September 30, 2022 and December 31, 2021)

 

 

35

 

 

 

35

 

Common stock ($1 par value; 1,470 million shares authorized at September 30, 2022 and December 31, 2021; 1,253 million shares issued at September 30, 2022 and 1,250 million shares issued at December 31, 2021)

 

 

1,253

 

 

 

1,250

 

Capital in excess of par value

 

 

24,527

 

 

 

24,449

 

Retained deficit

 

 

(13,419

)

 

 

(13,237

)

Accumulated other comprehensive income (loss)

 

 

(27

)

 

 

(33

)

Treasury stock, at cost (35 million shares of common stock)

 

 

(1,050

)

 

 

(1,041

)

Total stockholders’ equity

 

 

11,319

 

 

 

11,423

 

Noncontrolling interests in consolidated subsidiaries

 

 

2,591

 

 

 

2,678

 

Total equity

 

 

13,910

 

 

 

14,101

 

Total liabilities and equity

 

$

48,672

 

 

$

47,612

 

The Williams Companies, Inc.

Consolidated Statement of Cash Flows

(Unaudited)

 

 

Nine Months Ended

September 30,

 

 

2022

 

 

 

2021

 

 

(Millions)

OPERATING ACTIVITIES:

 

Net income (loss)

$

1,420

 

 

$

930

 

Adjustments to reconcile to net cash provided (used) by operating activities:

 

 

 

Depreciation and amortization

 

1,504

 

 

 

1,388

 

Provision (benefit) for deferred income taxes

 

182

 

 

 

313

 

Equity (earnings) losses

 

(492

)

 

 

(423

)

Distributions from unconsolidated affiliates

 

688

 

 

 

574

 

Net unrealized (gain) loss from derivative instruments

 

329

 

 

 

317

 

Amortization of stock-based awards

 

58

 

 

 

60

 

Cash provided (used) by changes in current assets and liabilities:

 

 

 

Accounts receivable

 

(672

)

 

 

(538

)

Inventories

 

(76

)

 

 

(112

)

Other current assets and deferred charges

 

(62

)

 

 

(67

)

Accounts payable

 

743

 

 

 

570

 

Accrued liabilities

 

167

 

 

 

67

 

Changes in current and noncurrent derivative assets and liabilities

 

86

 

 

 

(267

)

Other, including changes in noncurrent assets and liabilities

 

(205

)

 

 

(6

)

Net cash provided (used) by operating activities

 

3,670

 

 

 

2,806

 

FINANCING ACTIVITIES:

 

 

 

Proceeds from long-term debt

 

1,752

 

 

 

898

 

Payments of long-term debt

 

(2,019

)

 

 

(887

)

Proceeds from issuance of common stock

 

53

 

 

 

6

 

Common dividends paid

 

(1,553

)

 

 

(1,494

)

Dividends and distributions paid to noncontrolling interests

 

(141

)

 

 

(135

)

Contributions from noncontrolling interests

 

15

 

 

 

6

 

Payments for debt issuance costs

 

(14

)

 

 

(7

)

Other – net

 

(49

)

 

 

(13

)

Net cash provided (used) by financing activities

 

(1,956

)

 

 

(1,626

)

INVESTING ACTIVITIES:

 

 

 

Property, plant, and equipment:

 

 

 

Capital expenditures (1)

 

(1,447

)

 

 

(957

)

Dispositions – net

 

(19

)

 

 

5

 

Contributions in aid of construction

 

8

 

 

 

46

 

Purchases of businesses, net of cash acquired

 

(933

)

 

 

(126

)

Purchases of and contributions to equity-method investments

 

(140

)

 

 

(79

)

Other – net

 

(4

)

 

 

3

 

Net cash provided (used) by investing activities

 

(2,535

)

 

 

(1,108

)

Increase (decrease) in cash and cash equivalents

 

(821

)

 

 

72

 

Cash and cash equivalents at beginning of year

 

1,680

 

 

 

142

 

Cash and cash equivalents at end of period

$

859

 

 

$

214

 

_____________

 

 

 

(1) Increases to property, plant, and equipment

$

(1,549

)

 

$

(1,001

)

Changes in related accounts payable and accrued liabilities

 

102

 

 

 

44

 

Capital expenditures

$

(1,447

)

 

$

(957

)

Transmission & Gulf of Mexico

 

(UNAUDITED)

 

 

2021

 

2022

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

Regulated interstate natural gas transportation, storage, and other revenues (1)

$

708

 

$

693

 

$

706

 

$

739

 

$

2,846

 

 

$

730

 

$

717

 

$

734

 

$

2,181

 

 

Gathering, processing, storage and transportation revenues

 

86

 

 

90

 

 

74

 

 

94

 

 

344

 

 

 

82

 

 

84

 

 

99

 

 

265

 

 

Other fee revenues (1)

 

4

 

 

4

 

 

5

 

 

5

 

 

18

 

 

 

5

 

 

5

 

 

4

 

 

14

 

 

Commodity margins

 

8

 

 

7

 

 

8

 

 

12

 

 

35

 

 

 

15

 

 

11

 

 

10

 

 

36

 

 

Net unrealized gain (loss) from derivative instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

1

 

 

Operating and administrative costs (1)

 

(198

)

 

(197

)

 

(215

)

 

(226

)

 

(836

)

 

 

(202

)

 

(227

)

 

(238

)

 

(667

)

 

Other segment income (expenses) - net (1)

 

5

 

 

5

 

 

7

 

 

16

 

 

33

 

 

 

19

 

 

17

 

 

(22

)

 

14

 

 

Impairment of certain assets

 

 

 

(2

)

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

Proportional Modified EBITDA of equity-method investments

 

47

 

 

46

 

 

45

 

 

45

 

 

183

 

 

 

48

 

 

45

 

 

50

 

 

143

 

 

Modified EBITDA

 

660

 

 

646

 

 

630

 

 

685

 

 

2,621

 

 

 

697

 

 

652

 

 

638

 

 

1,987

 

 

Adjustments

 

 

 

2

 

 

 

 

 

 

2

 

 

 

 

 

 

 

33

 

 

33

 

 

Adjusted EBITDA

$

660

 

$

648

 

$

630

 

$

685

 

$

2,623

 

 

$

697

 

$

652

 

$

671

 

$

2,020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics for Operated Assets

 

 

 

 

 

 

 

 

 

 

 

Natural Gas Transmission

 

 

 

 

 

 

 

 

 

 

 

Transcontinental Gas Pipe Line

 

 

 

 

 

 

 

 

 

 

 

Avg. daily transportation volumes (Tbtu)

 

14.1

 

 

13.1

 

 

13.8

 

 

14.2

 

 

13.8

 

 

 

15.0

 

 

13.5

 

 

14.7

 

 

14.4

 

 

Avg. daily firm reserved capacity (Tbtu)

 

18.6

 

 

18.3

 

 

18.7

 

 

19.2

 

 

18.7

 

 

 

19.3

 

 

19.1

 

 

19.2

 

 

19.2

 

 

Northwest Pipeline LLC

 

 

 

 

 

 

 

 

 

 

 

Avg. daily transportation volumes (Tbtu)

 

2.8

 

 

2.2

 

 

2.0

 

 

2.6

 

 

2.4

 

 

 

2.8

 

 

2.1

 

 

2.0

 

 

2.3

 

 

Avg. daily firm reserved capacity (Tbtu)

 

3.8

 

 

3.8

 

 

3.8

 

 

3.8

 

 

3.8

 

 

 

3.8

 

 

3.8

 

 

3.8

 

 

3.8

 

 

Gulfstream - Non-consolidated

 

 

 

 

 

 

 

 

 

 

 

Avg. daily transportation volumes (Tbtu)

 

1.0

 

 

1.2

 

 

1.3

 

 

1.1

 

 

1.2

 

 

 

0.9

 

 

1.3

 

 

1.4

 

 

1.2

 

 

Avg. daily firm reserved capacity (Tbtu)

 

1.3

 

 

1.3

 

 

1.3

 

 

1.3

 

 

1.3

 

 

 

1.3

 

 

1.3

 

 

1.4

 

 

1.3

 

 

Gathering, Processing, and Crude Oil Transportation

 

 

 

 

 

 

 

 

 

 

 

Consolidated (2)

 

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf/d)

 

0.28

 

 

0.31

 

 

0.25

 

 

0.29

 

 

0.28

 

 

 

0.30

 

 

0.28

 

 

0.29

 

 

0.29

 

 

Plant inlet natural gas volumes (Bcf/d)

 

0.46

 

 

0.41

 

 

0.44

 

 

0.48

 

 

0.45

 

 

 

0.48

 

 

0.46

 

 

0.49

 

 

0.48

 

 

NGL production (Mbbls/d)

 

29

 

 

26

 

 

28

 

 

33

 

 

29

 

 

 

31

 

 

31

 

 

26

 

 

29

 

 

NGL equity sales (Mbbls/d)

 

7

 

 

5

 

 

6

 

 

7

 

 

6

 

 

 

7

 

 

7

 

 

4

 

 

6

 

 

Crude oil transportation volumes (Mbbls/d)

 

130

 

 

151

 

 

120

 

 

135

 

 

134

 

 

 

110

 

 

124

 

 

125

 

 

120

 

 

Non-consolidated (3)

 

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf/d)

 

0.36

 

 

0.40

 

 

0.29

 

 

0.36

 

 

0.35

 

 

 

0.39

 

 

0.37

 

 

0.41

 

 

0.39

 

 

Plant inlet natural gas volumes (Bcf/d)

 

0.37

 

 

0.40

 

 

0.29

 

 

0.36

 

 

0.35

 

 

 

0.38

 

 

0.37

 

 

0.41

 

 

0.39

 

 

NGL production (Mbbls/d)

 

28

 

 

31

 

 

21

 

 

27

 

 

27

 

 

 

28

 

 

26

 

 

29

 

 

28

 

 

NGL equity sales (Mbbls/d)

 

9

 

 

11

 

 

6

 

 

7

 

 

8

 

 

 

8

 

 

6

 

 

7

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes certain amounts associated with revenues and operating costs for tracked or reimbursable charges. Also, Operating and administrative costs increased in 2021, particularly in third quarter and fourth quarter, due to higher incentive and equity compensation expense.

 

(2) Excludes volumes associated with equity-method investments that are not consolidated in our results.

 

(3) Includes 100% of the volumes associated with operated equity-method investments.

 

Northeast G&P

 

(UNAUDITED)

 

 

2021

 

2022

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

Gathering, processing, transportation, and fractionation revenues

$

311

 

$

315

 

$

340

 

$

342

 

$

1,308

 

 

$

323

 

$

350

 

$

354

 

$

1,027

 

 

Other fee revenues (1)

 

25

 

 

25

 

 

26

 

 

27

 

 

103

 

 

 

27

 

 

27

 

 

27

 

 

81

 

 

Commodity margins

 

3

 

 

 

 

(2

)

 

4

 

 

5

 

 

 

6

 

 

1

 

 

3

 

 

10

 

 

Operating and administrative costs (1)

 

(89

)

 

(86

)

 

(94

)

 

(103

)

 

(372

)

 

 

(85

)

 

(102

)

 

(101

)

 

(288

)

 

Other segment income (expenses) - net

 

(1

)

 

(7

)

 

(3

)

 

(3

)

 

(14

)

 

 

(3

)

 

 

 

(1

)

 

(4

)

 

Proportional Modified EBITDA of equity-method investments

 

153

 

 

162

 

 

175

 

 

192

 

 

682

 

 

 

150

 

 

174

 

 

182

 

 

506

 

 

Modified EBITDA

 

402

 

 

409

 

 

442

 

 

459

 

 

1,712

 

 

 

418

 

 

450

 

 

464

 

 

1,332

 

 

Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

402

 

$

409

 

$

442

 

$

459

 

$

1,712

 

 

$

418

 

$

450

 

$

464

 

$

1,332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics for Operated Assets and Blue Racer Midstream

 

 

 

 

 

 

 

 

 

 

 

Gathering and Processing

 

 

 

 

 

 

 

 

 

 

 

Consolidated (2)

 

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf/d)

 

4.19

 

 

4.10

 

 

4.26

 

 

4.38

 

 

4.24

 

 

 

4.03

 

 

4.19

 

 

4.22

 

 

4.15

 

 

Plant inlet natural gas volumes (Bcf/d)

 

1.41

 

 

1.62

 

 

1.64

 

 

1.62

 

 

1.57

 

 

 

1.46

 

 

1.70

 

 

1.74

 

 

1.63

 

 

NGL production (Mbbls/d)

 

102

 

 

115

 

 

121

 

 

120

 

 

115

 

 

 

110

 

 

118

 

 

125

 

 

118

 

 

NGL equity sales (Mbbls/d)

 

1

 

 

1

 

 

 

 

1

 

 

1

 

 

 

2

 

 

1

 

 

1

 

 

1

 

 

Non-consolidated (3)

 

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf/d)

 

6.62

 

 

6.76

 

 

6.92

 

 

6.84

 

 

6.79

 

 

 

6.62

 

 

6.76

 

 

6.58

 

 

6.65

 

 

Plant inlet natural gas volumes (Bcf/d)

 

0.87

 

 

0.87

 

 

0.79

 

 

0.73

 

 

0.82

 

 

 

0.66

 

 

0.76

 

 

0.66

 

 

0.69

 

 

NGL production (Mbbls/d)

 

60

 

 

58

 

 

56

 

 

51

 

 

56

 

 

 

50

 

 

53

 

 

45

 

 

50

 

 

NGL equity sales (Mbbls/d)

 

8

 

 

6

 

 

6

 

 

6

 

 

6

 

 

 

4

 

 

3

 

 

2

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes certain amounts associated with revenues and operating costs for reimbursable charges. Also, Operating and administrative costs increased in 2021, particularly in third quarter and fourth quarter, due to higher incentive and equity compensation expense.

 

(2) Includes volumes associated with Susquehanna Supply Hub, the Northeast JV, and Utica Supply Hub, all of which are consolidated.

 

(3) Includes 100% of the volumes associated with operated equity-method investments, including the Laurel Mountain Midstream partnership; and the Bradford Supply Hub and the Marcellus South Supply Hub within the Appalachia Midstream Services partnership. Also all periods include Blue Racer Midstream.

 

West

 

(UNAUDITED)

 

 

2021

 

2022

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

Net gathering, processing, transportation, storage, and fractionation revenues

$

269

 

$

285

 

$

302

 

$

313

 

$

1,169

 

 

$

317

 

$

360

 

 

397

 

$

1,074

 

 

Other fee revenues (1)

 

6

 

 

4

 

 

4

 

 

7

 

 

21

 

 

 

6

 

 

6

 

 

6

 

 

18

 

 

Commodity margins

 

31

 

 

26

 

 

21

 

 

22

 

 

100

 

 

 

23

 

 

25

 

 

27

 

 

75

 

 

Operating and administrative costs (1)

 

(109

)

 

(113

)

 

(108

)

 

(112

)

 

(442

)

 

 

(112

)

 

(133

)

 

(128

)

 

(373

)

 

Other segment income (expenses) - net

 

 

 

(1

)

 

11

 

 

(2

)

 

8

 

 

 

(1

)

 

(1

)

 

(6

)

 

(8

)

 

Proportional Modified EBITDA of equity-method investments

 

25

 

 

22

 

 

27

 

 

31

 

 

105

 

 

 

27

 

 

31

 

 

41

 

 

99

 

 

Modified EBITDA

 

222

 

 

223

 

 

257

 

 

259

 

 

961

 

 

 

260

 

 

288

 

 

337

 

 

885

 

 

Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

8

 

 

Adjusted EBITDA

$

222

 

$

223

 

$

257

 

$

259

 

$

961

 

 

$

260

 

$

296

 

$

337

 

$

893

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics for Operated Assets

 

 

 

 

 

 

 

 

 

 

 

Gathering and Processing

 

 

 

 

 

 

 

 

 

 

 

Consolidated (2)

 

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf/d) (3)

 

3.11

 

 

3.21

 

 

3.31

 

 

3.36

 

 

3.25

 

 

 

3.47

 

 

5.14

 

 

5.20

 

 

5.09

 

 

Plant inlet natural gas volumes (Bcf/d)

 

1.20

 

 

1.20

 

 

1.29

 

 

1.22

 

 

1.23

 

 

 

1.13

 

 

1.14

 

 

1.21

 

 

1.16

 

 

NGL production (Mbbls/d)

 

36

 

 

39

 

 

49

 

 

43

 

 

41

 

 

 

47

 

 

49

 

 

45

 

 

47

 

 

NGL equity sales (Mbbls/d)

 

13

 

 

16

 

 

19

 

 

15

 

 

16

 

 

 

17

 

 

18

 

 

13

 

 

16

 

 

Non-consolidated (4)

 

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf/d)

 

0.27

 

 

0.30

 

 

0.28

 

 

0.28

 

 

0.29

 

 

 

0.28

 

 

0.28

 

 

0.29

 

 

0.29

 

 

Plant inlet natural gas volumes (Bcf/d)

 

0.27

 

 

0.30

 

 

0.28

 

 

0.28

 

 

0.28

 

 

 

0.27

 

 

0.28

 

 

0.29

 

 

0.28

 

 

NGL production (Mbbls/d)

 

24

 

 

32

 

 

32

 

 

32

 

 

29

 

 

 

31

 

 

32

 

 

34

 

 

33

 

 

NGL and Crude Oil Transportation volumes (Mbbls/d) (5)

 

85

 

 

101

 

 

119

 

 

132

 

 

109

 

 

 

118

 

 

144

 

 

172

 

 

145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes certain amounts associated with revenues and operating costs for reimbursable charges. Also, Operating and administrative costs increased in 2021, particularly in third quarter and fourth quarter, due to higher incentive and equity compensation expense.

 

(2) Excludes volumes associated with equity-method investments that are not consolidated in our results.

 

(3) Includes 100% of the volumes associated with the Trace Acquisition gathering assets after the purchase on April 29, 2022. Average volumes for these assets were calculated over the period owned.

 

(4) Includes 100% of the volumes associated with operated equity-method investments, including Rocky Mountain Midstream.

 

(5) Includes 100% of the volumes associated with operated equity-method investments, including the Overland Pass Pipeline Company and Rocky Mountain Midstream.

 

Gas & NGL Marketing Services

 

(UNAUDITED)

 

 

2021

 

2022

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

Commodity margins

$

95

 

$

13

 

$

46

 

$

11

 

$

165

 

 

$

100

 

$

23

 

$

39

 

$

162

 

 

Other fee revenues

 

1

 

 

1

 

 

 

 

1

 

 

3

 

 

 

1

 

 

 

 

1

 

 

2

 

 

Net unrealized gain (loss) from derivative instruments

 

 

 

(3

)

 

(294

)

 

188

 

 

(109

)

 

 

(57

)

 

(288

)

 

5

 

 

(340

)

 

Operating and administrative costs

 

(3

)

 

(3

)

 

(14

)

 

(17

)

 

(37

)

 

 

(31

)

 

(23

)

 

(24

)

 

(78

)

 

Other segment income (expenses) - net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

(1

)

 

5

 

 

Modified EBITDA

 

93

 

 

8

 

 

(262

)

 

183

 

 

22

 

 

 

13

 

 

(282

)

 

20

 

 

(249

)

 

Adjustments (1)

 

 

 

 

 

296

 

 

(172

)

 

124

 

 

 

52

 

 

288

 

 

18

 

 

358

 

 

Adjusted EBITDA

$

93

 

$

8

 

$

34

 

$

11

 

$

146

 

 

$

65

 

$

6

 

$

38

 

$

109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics

 

 

 

 

 

 

 

 

 

 

 

Product Sales Volumes

 

 

 

 

 

 

 

 

 

 

 

Natural Gas (Bcf/d)(2)

 

1.05

 

 

0.94

 

 

7.98

 

 

7.71

 

 

7.70

 

 

 

7.96

 

 

6.66

 

 

7.11

 

 

7.25

 

 

NGLs (Mbbls/d)

 

233

 

 

216

 

 

229

 

 

229

 

 

227

 

 

 

246

 

 

234

 

 

267

 

 

249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) 2022 Adjustments for Gas & NGL Marketing Services includes the impact of volatility on NGL linefill transactions. Had this adjustment been made in 2021, Adjusted EBITDA would have been reduced by ($15), ($5), ($15), $1, and ($34) for the 1st, 2nd, 3rd, and 4th quarters, and full year period, respectively.

 

(2) Includes 100% of the volumes associated with the Sequent Acquisition after the purchase on July 1, 2021. Average volumes were calculated over the period owned.

 

Other

 

(UNAUDITED)

 

 

2021

 

2022

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

Service revenues

$

7

 

$

8

 

$

8

 

$

9

 

$

32

 

 

$

9

 

$

7

 

$

6

 

$

22

 

 

Net realized product sales

 

56

 

 

49

 

 

105

 

 

103

 

 

313

 

 

 

96

 

 

142

 

 

180

 

 

418

 

 

Net unrealized gain (loss) from derivative instruments

 

 

 

(5

)

 

(15

)

 

20

 

 

 

 

 

(66

)

 

47

 

 

29

 

 

10

 

 

Operating and administrative costs

 

(25

)

 

(26

)

 

(58

)

 

(43

)

 

(152

)

 

 

(33

)

 

(57

)

 

(62

)

 

(152

)

 

Other segment income (expenses) - net

 

(5

)

 

(6

)

 

(2

)

 

(2

)

 

(15

)

 

 

(1

)

 

 

 

(13

)

 

(14

)

 

Modified EBITDA

 

33

 

 

20

 

 

38

 

 

87

 

 

178

 

 

 

5

 

 

139

 

 

140

 

 

284

 

 

Adjustments

 

5

 

 

9

 

 

19

 

 

(18

)

 

15

 

 

 

66

 

 

(47

)

 

(13

)

 

6

 

 

Adjusted EBITDA

$

38

 

$

29

 

$

57

 

$

69

 

$

193

 

 

$

71

 

$

92

 

$

127

 

$

290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics

 

 

 

 

 

 

 

 

 

 

 

Net Product Sales Volumes

 

 

 

 

 

 

 

 

 

 

 

Natural Gas (Bcf/d)

 

0.07

 

 

0.14

 

 

0.17

 

 

0.14

 

 

0.13

 

 

 

0.12

 

 

0.19

 

 

0.27

 

 

0.19

 

 

NGLs (Mbbls/d)

 

2

 

 

6

 

 

8

 

 

8

 

 

6

 

 

 

7

 

 

7

 

 

8

 

 

7

 

 

Oil (Mbbls/d)

 

1

 

 

2

 

 

3

 

 

3

 

 

2

 

 

 

2

 

 

3

 

 

2

 

 

2

 

 

 

 

Capital Expenditures and Investments

 

(UNAUDITED)

 

 

2021

 

2022

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

$

109

 

$

209

 

$

172

 

$

173

 

$

663

 

 

$

125

 

$

129

 

$

637

 

$

891

 

 

Northeast G&P

 

40

 

 

46

 

 

41

 

 

22

 

 

149

 

 

 

40

 

 

30

 

 

52

 

 

122

 

 

West

 

33

 

 

76

 

 

49

 

 

45

 

 

203

 

 

 

61

 

 

82

 

 

94

 

 

237

 

 

Other

 

78

 

 

94

 

 

10

 

 

42

 

 

224

 

 

 

65

 

 

74

 

 

58

 

 

197

 

 

Total (1)

$

260

 

$

425

 

$

272

 

$

282

 

$

1,239

 

 

$

291

 

$

315

 

$

841

 

$

1,447

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of and contributions to equity-method investments:

 

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

$

3

 

$

6

 

$

5

 

$

12

 

$

26

 

 

$

16

 

$

26

 

$

11

 

$

53

 

 

Northeast G&P

 

11

 

 

24

 

 

30

 

 

24

 

 

89

 

 

 

32

 

 

18

 

 

28

 

 

78

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

1

 

 

9

 

 

Total

$

14

 

$

30

 

$

35

 

$

36

 

$

115

 

 

$

56

 

$

44

 

$

40

 

$

140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary:

 

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

$

112

 

$

215

 

$

177

 

$

185

 

$

689

 

 

$

141

 

$

155

 

$

648

 

$

944

 

 

Northeast G&P

 

51

 

 

70

 

 

71

 

 

46

 

 

238

 

 

 

72

 

 

48

 

 

80

 

 

200

 

 

West

 

33

 

 

76

 

 

49

 

 

45

 

 

203

 

 

 

61

 

 

82

 

 

94

 

 

237

 

 

Other

 

78

 

 

94

 

 

10

 

 

42

 

 

224

 

 

 

73

 

 

74

 

 

59

 

 

206

 

 

Total

$

274

 

$

455

 

$

307

 

$

318

 

$

1,354

 

 

$

347

 

$

359

 

$

881

 

$

1,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital investments:

 

 

 

 

 

 

 

 

 

 

 

Increases to property, plant, and equipment

$

263

 

$

430

 

$

308

 

$

304

 

$

1,305

 

 

$

260

 

$

382

 

$

907

 

$

1,549

 

 

Purchases of businesses, net of cash acquired

 

 

 

 

 

126

 

 

25

 

 

151

 

 

 

 

 

933

 

 

 

 

933

 

 

Purchases of and contributions to equity-method investments

 

14

 

 

30

 

 

35

 

 

36

 

 

115

 

 

 

56

 

 

44

 

 

40

 

 

140

 

 

Purchases of other long-term investments

 

 

 

 

 

 

 

6

 

 

6

 

 

 

 

 

3

 

 

3

 

 

6

 

 

Total

$

277

 

$

460

 

$

469

 

$

371

 

$

1,577

 

 

$

316

 

$

1,362

 

$

950

 

$

2,628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Increases to property, plant, and equipment

$

263

 

$

430

 

$

308

 

$

304

 

$

1,305

 

 

$

260

 

$

382

 

$

907

 

$

1,549

 

 

Changes in related accounts payable and accrued liabilities

 

(3

)

 

(5

)

 

(36

)

 

(22

)

 

(66

)

 

 

31

 

 

(67

)

 

(66

)

 

(102

)

 

Capital expenditures

$

260

 

$

425

 

$

272

 

$

282

 

$

1,239

 

 

$

291

 

$

315

 

$

841

 

$

1,447

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributions from noncontrolling interests

$

2

 

$

4

 

$

 

$

3

 

$

9

 

 

$

3

 

$

5

 

$

7

 

$

15

 

 

Contributions in aid of construction

$

19

 

$

17

 

$

10

 

$

6

 

$

52

 

 

$

(3

)

$

9

 

$

2

 

$

8

 

 

Proceeds from disposition of equity-method investments

$

 

$

1

 

$

 

$

 

$

1

 

 

$

 

$

 

$

7

 

$

7

 

 

Non-GAAP Measures

This news release and accompanying materials may include certain financial measures – adjusted EBITDA, adjusted income (“earnings”), adjusted earnings per share, available funds from operations and dividend coverage ratio – that are non-GAAP financial measures as defined under the rules of the SEC.

Our segment performance measure, modified EBITDA, is defined as net income (loss) before income (loss) from discontinued operations, income tax expense, net interest expense, equity earnings from equity-method investments, other net investing income, impairments of equity investments and goodwill, depreciation and amortization expense, and accretion expense associated with asset retirement obligations for nonregulated operations. We also add our proportional ownership share (based on ownership interest) of modified EBITDA of equity-method investments.

Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Such items are excluded from net income to determine adjusted income and adjusted earnings per share. Management believes this measure provides investors meaningful insight into results from ongoing operations.

Available funds from operations is defined as cash flow from operations excluding the effect of changes in working capital and certain other changes in noncurrent assets and liabilities, reduced by preferred dividends and net distributions to noncontrolling interests.

This news release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of assets and the cash that the business is generating.

Neither adjusted EBITDA, adjusted income, nor available funds from operations are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

Reconciliation of Income (Loss) Attributable to The Williams Companies, Inc. to Non-GAAP Adjusted Income

 

(UNAUDITED)

 

 

2021

 

2022

 

(Dollars in millions, except per-share amounts)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) attributable to The Williams Companies, Inc. available to common stockholders

$

425

 

$

304

 

$

164

 

$

621

 

$

1,514

 

 

$

379

 

$

400

 

$

599

 

$

1,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) - diluted earnings (loss) per common share (1)

$

.35

 

$

.25

 

$

.13

 

$

.51

 

$

1.24

 

 

$

.31

 

$

.33

 

$

.49

 

$

1.13

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

 

 

 

 

 

 

 

 

 

 

 

Loss related to Eminence storage cavern abandonments

$

 

$

 

$

 

$

 

$

 

 

$

 

$

 

$

19

 

$

19

 

 

Regulatory liability charges associated with decrease in Transco’s estimated deferred state income tax rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

 

15

 

 

Net unrealized (gain) loss from derivative instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

(1

)

 

Impairment of certain assets

 

 

 

2

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

Total Transmission & Gulf of Mexico adjustments

 

 

 

2

 

 

 

 

 

 

2

 

 

 

 

 

 

 

33

 

 

33

 

 

West

 

 

 

 

 

 

 

 

 

 

 

Trace acquisition costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

8

 

 

Total West adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

8

 

 

Gas & NGL Marketing Services

 

 

 

 

 

 

 

 

 

 

 

Amortization of purchase accounting inventory fair value adjustment

 

 

 

 

 

2

 

 

16

 

 

18

 

 

 

15

 

 

 

 

 

 

15

 

 

Impact of volatility on NGL linefill transactions (2)

 

 

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

 

23

 

 

3

 

 

Net unrealized (gain) loss from derivative instruments

 

 

 

 

 

294

 

 

(188

)

 

106

 

 

 

57

 

 

288

 

 

(5

)

 

340

 

 

Total Gas & NGL Marketing Services adjustments

 

 

 

 

 

296

 

 

(172

)

 

124

 

 

 

52

 

 

288

 

 

18

 

 

358

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Regulatory liability charge associated with decrease in Transco’s estimated deferred state income tax rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

5

 

 

Expenses associated with Sequent acquisition and transition

 

 

 

 

 

3

 

 

2

 

 

5

 

 

 

 

 

 

 

 

 

 

 

Net unrealized (gain) loss from derivative instruments

 

 

 

4

 

 

16

 

 

(20

)

 

 

 

 

66

 

 

(47

)

 

(29

)

 

(10

)

 

Accrual for loss contingencies

 

5

 

 

5

 

 

 

 

 

 

10

 

 

 

 

 

 

 

11

 

 

11

 

 

Total Other adjustments

 

5

 

 

9

 

 

19

 

 

(18

)

 

15

 

 

 

66

 

 

(47

)

 

(13

)

 

6

 

 

Adjustments included in Modified EBITDA

 

5

 

 

11

 

 

315

 

 

(190

)

 

141

 

 

 

118

 

 

249

 

 

38

 

 

405

 

 

Adjustments below Modified EBITDA

 

 

 

 

 

 

 

 

 

 

 

Accelerated depreciation for decommissioning assets

 

 

 

20

 

 

13

 

 

 

 

33

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets from Sequent acquisition

 

 

 

 

 

21

 

 

(3

)

 

18

 

 

 

42

 

 

41

 

 

42

 

 

125

 

 

Depreciation adjustment related to Eminence storage cavern abandonments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

(1

)

 

 

 

 

 

20

 

 

34

 

 

(3

)

 

51

 

 

 

42

 

 

41

 

 

41

 

 

124

 

 

Total adjustments

 

5

 

 

31

 

 

349

 

 

(193

)

 

192

 

 

 

160

 

 

290

 

 

79

 

 

529

 

 

Less tax effect for above items

 

(1

)

 

(8

)

 

(87

)

 

48

 

 

(48

)

 

 

(40

)

 

(72

)

 

(17

)

 

(129

)

 

Adjustments for tax-related items (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(134

)

 

(69

)

 

(203

)

 

Adjusted income available to common stockholders

$

429

 

$

327

 

$

426

 

$

476

 

$

1,658

 

 

$

499

 

$

484

 

$

592

 

$

1,575

 

 

Adjusted income - diluted earnings per common share (1)

$

.35

 

$

.27

 

$

.35

 

$

.39

 

$

1.36

 

 

$

.41

 

$

.40

 

$

.48

 

$

1.29

 

 

Weighted-average shares - diluted (thousands)

 

1,217,211

 

 

1,217,476

 

 

1,217,979

 

 

1,221,454

 

 

1,218,215

 

 

 

1,221,279

 

 

1,222,694

 

 

1,222,472

 

 

1,222,153

 

 

(1) The sum of earnings per share for the quarters may not equal the total earnings per share for the year due to changes in the weighted-average number of common shares outstanding.

 

(2) Had this adjustment been made in 2021, the Gas & NGL Marketing segment would have included adjustments of ($15), ($5), ($15), $1, and ($34) for the 1st, 2nd, 3rd, and 4th quarters, and full year period, respectively. This would have reduced Adjusted income – diluted earnings per common share by $0.01, $0.01, and $0.02 for the 1st and 3rd quarters, and full year period, respectively.

 

(3) The second quarter of 2022 includes adjustments for the reversal of valuation allowance due to the expected utilization of certain deferred income tax assets and previously unrecognized tax benefits from the resolution of certain federal income tax audits. The third quarter of 2022 includes an unfavorable adjustment to reverse the net benefit primarily associated with a significant decrease in our estimated deferred state income tax rate, partially offset by an unfavorable revision to a state net operating loss carryforward.

 

Reconciliation of "Net Income (Loss)" to “Modified EBITDA” and Non-GAAP “Adjusted EBITDA”

 

(UNAUDITED)

 

 

2021

 

2022

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

435

 

$

322

 

$

173

 

$

632

 

$

1,562

 

 

$

392

 

$

407

 

$

621

 

$

1,420

 

 

Provision (benefit) for income taxes

 

141

 

 

119

 

 

53

 

 

198

 

 

511

 

 

 

118

 

 

(45

)

 

96

 

 

169

 

 

Interest expense

 

294

 

 

298

 

 

292

 

 

295

 

 

1,179

 

 

 

286

 

 

281

 

 

291

 

 

858

 

 

Equity (earnings) losses

 

(131

)

 

(135

)

 

(157

)

 

(185

)

 

(608

)

 

 

(136

)

 

(163

)

 

(193

)

 

(492

)

 

Other investing (income) loss - net

 

(2

)

 

(2

)

 

(2

)

 

(1

)

 

(7

)

 

 

(1

)

 

(2

)

 

(1

)

 

(4

)

 

Proportional Modified EBITDA of equity-method investments

 

225

 

 

230

 

 

247

 

 

268

 

 

970

 

 

 

225

 

 

250

 

 

273

 

 

748

 

 

Depreciation and amortization expenses

 

438

 

 

463

 

 

487

 

 

454

 

 

1,842

 

 

 

498

 

 

506

 

 

500

 

 

1,504

 

 

Accretion expense associated with asset retirement obligations for nonregulated operations

 

10

 

 

11

 

 

12

 

 

12

 

 

45

 

 

 

11

 

 

13

 

 

12

 

 

36

 

 

Modified EBITDA

$

1,410

 

$

1,306

 

$

1,105

 

$

1,673

 

$

5,494

 

 

$

1,393

 

$

1,247

 

$

1,599

 

$

4,239

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

$

660

 

$

646

 

$

630

 

$

685

 

$

2,621

 

 

$

697

 

$

652

 

$

638

 

$

1,987

 

 

Northeast G&P

 

402

 

 

409

 

 

442

 

 

459

 

 

1,712

 

 

 

418

 

 

450

 

 

464

 

 

1,332

 

 

West

 

222

 

 

223

 

 

257

 

 

259

 

 

961

 

 

 

260

 

 

288

 

 

337

 

 

885

 

 

Gas & NGL Marketing Services

 

93

 

 

8

 

 

(262

)

 

183

 

 

22

 

 

 

13

 

 

(282

)

 

20

 

 

(249

)

 

Other

 

33

 

 

20

 

 

38

 

 

87

 

 

178

 

 

 

5

 

 

139

 

 

140

 

 

284

 

 

Total Modified EBITDA

$

1,410

 

$

1,306

 

$

1,105

 

$

1,673

 

$

5,494

 

 

$

1,393

 

$

1,247

 

$

1,599

 

$

4,239

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments (1):

 

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

$

 

$

2

 

$

 

$

 

$

2

 

 

$

 

$

 

$

33

 

$

33

 

 

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

8

 

 

Gas & NGL Marketing Services(2)

 

 

 

 

 

296

 

 

(172

)

 

124

 

 

 

52

 

 

288

 

 

18

 

 

358

 

 

Other

 

5

 

 

9

 

 

19

 

 

(18

)

 

15

 

 

 

66

 

 

(47

)

 

(13

)

 

6

 

 

Total Adjustments

$

5

 

$

11

 

$

315

 

$

(190

)

$

141

 

 

$

118

 

$

249

 

$

38

 

$

405

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

$

660

 

$

648

 

$

630

 

$

685

 

$

2,623

 

 

$

697

 

$

652

 

$

671

 

$

2,020

 

 

Northeast G&P

 

402

 

 

409

 

 

442

 

 

459

 

 

1,712

 

 

 

418

 

 

450

 

 

464

 

 

1,332

 

 

West

 

222

 

 

223

 

 

257

 

 

259

 

 

961

 

 

 

260

 

 

296

 

 

337

 

 

893

 

 

Gas & NGL Marketing Services

 

93

 

 

8

 

 

34

 

 

11

 

 

146

 

 

 

65

 

 

6

 

 

38

 

 

109

 

 

Other

 

38

 

 

29

 

 

57

 

 

69

 

 

193

 

 

 

71

 

 

92

 

 

127

 

 

290

 

 

Total Adjusted EBITDA

$

1,415

 

$

1,317

 

$

1,420

 

$

1,483

 

$

5,635

 

 

$

1,511

 

$

1,496

 

$

1,637

 

$

4,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Adjustments by segment are detailed in the "Reconciliation of Income (Loss) Attributable to The Williams Companies, Inc. to Non-GAAP Adjusted Income," which is also included in these materials.

 

(2) 2022 Adjustments for Gas & NGL Marketing Services includes the impact of volatility on NGL linefill transactions. Had this adjustment been made in 2021, Adjusted EBITDA would have been reduced by ($15), ($5), ($15), $1, and ($34) for the 1st, 2nd, 3rd, and 4th quarters, and full year period, respectively.

 

Reconciliation of Cash Flow from Operating Activities to Available Funds from Operations (AFFO)

 

(UNAUDITED)

 

 

2021

 

2022

 

(Dollars in millions, except coverage ratios)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

 

The Williams Companies, Inc.

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP "Net cash provided (used) by operating activities" to Non-GAAP "Available funds from operations"

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided (used) by operating activities

$

915

 

$

1,057

 

$

834

 

$

1,139

 

$

3,945

 

 

$

1,082

 

$

1,098

 

$

1,490

 

$

3,670

 

 

Exclude: Cash (provided) used by changes in:

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

59

 

 

(9

)

 

488

 

 

7

 

 

545

 

 

 

3

 

 

794

 

 

(125

)

 

672

 

 

Inventories

 

8

 

 

50

 

 

54

 

 

12

 

 

124

 

 

 

(178

)

 

177

 

 

77

 

 

76

 

 

Other current assets and deferred charges

 

6

 

 

50

 

 

11

 

 

(4

)

 

63

 

 

 

65

 

 

(50

)

 

47

 

 

62

 

 

Accounts payable

 

(38

)

 

(56

)

 

(476

)

 

(73

)

 

(643

)

 

 

138

 

 

(828

)

 

(53

)

 

(743

)

 

Accrued liabilities

 

116

 

 

(130

)

 

(53

)

 

9

 

 

(58

)

 

 

149

 

 

(125

)

 

(191

)

 

(167

)

 

Changes in current and noncurrent derivative assets and liabilities

 

6

 

 

25

 

 

236

 

 

10

 

 

277

 

 

 

(101

)

 

52

 

 

(37

)

 

(86

)

 

Other, including changes in noncurrent assets and liabilities

 

10

 

 

(31

)

 

27

 

 

(5

)

 

1

 

 

 

67

 

 

65

 

 

73

 

 

205

 

 

Preferred dividends paid

 

(1

)

 

 

 

(1

)

 

(1

)

 

(3

)

 

 

(1

)

 

 

 

(1

)

 

(2

)

 

Dividends and distributions paid to noncontrolling interests

 

(54

)

 

(41

)

 

(40

)

 

(52

)

 

(187

)

 

 

(37

)

 

(58

)

 

(46

)

 

(141

)

 

Contributions from noncontrolling interests

 

2

 

 

4

 

 

 

 

3

 

 

9

 

 

 

3

 

 

5

 

 

7

 

 

15

 

 

Available funds from operations

$

1,029

 

$

919

 

$

1,080

 

$

1,045

 

$

4,073

 

 

$

1,190

 

$

1,130

 

$

1,241

 

$

3,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common dividends paid

$

498

 

$

498

 

$

498

 

$

498

 

$

1,992

 

 

$

518

 

$

517

 

$

518

 

$

1,553

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coverage ratio:

 

 

 

 

 

 

 

 

 

 

 

Available funds from operations divided by Common dividends paid

 

2.07

 

 

1.85

 

 

2.17

 

 

2.10

 

 

2.04

 

 

 

2.30

 

 

2.19

 

 

2.40

 

 

2.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income (Loss) to Modified EBITDA, Non-GAAP Adjusted EBITDA and Cash Flow from Operating Activities to Non-GAAP Available Funds from Operations (AFFO)

 

 

 

2022 Guidance

(Dollars in millions, except per-share amounts and coverage ratio)

 

Low

 

Mid

 

High

 

 

 

 

 

 

 

Net income (loss)

 

$

1,754

 

$

1,854

 

 

$

1,954

Provision (benefit) for income taxes

 

 

400

 

 

450

 

 

 

500

Interest expense

 

 

 

 

1,145

 

 

 

Equity (earnings) losses

 

 

 

 

(610

)

 

 

Proportional Modified EBITDA of equity-method investments

 

 

 

 

960

 

 

 

Depreciation and amortization expenses and accretion for asset retirement obligations associated with nonregulated operations

 

 

 

 

2,075

 

 

 

Other

 

 

 

 

9

 

 

 

Modified EBITDA

 

$

5,733

 

$

5,883

 

 

$