Williams OKs Capex Budget, Maintains Cash Distribution

Williams Companies Inc. (NYSE: WMB) and Williams Partners L.P. (NYSE: WPZ) announced Monday morning that the 2016 capital spending budget for Williams Partners is expected to total $2 billion, a decline of about a third from the 2015 capex budget. The drop reflects project deferrals, delays and cancellations caused by “the current commodity price environment.”

Williams Partners also has announced that the board of directors of its general partner has approved a quarterly cash distribution of $0.85 per common unit for the fourth quarter. The distribution cash coverage is expected to be approximately 1.0x, excluding a $209 million waiver of incentive distribution rights related to the cancellation of the proposed merger between Williams and Williams Partners. That combination was cancelled as part of a merger deal with Energy Transfer Equity L.P. (NYSE: ETE).

The capital budget includes $1.3 billion to expand the Transco pipeline and other interstate pipeline growth projects the company says are fully contracted with investment-grade customers. Growth outside the interstate pipeline operations will total about $700 million for improvements to gathering and processing assets.

Williams remains committed to its merger with Energy Transfer Equity, but said only that it expects the merger to be completed “as expeditiously as possible.” The merger is still subject to approval by Williams stockholders and other customary closing conditions.

Williams and Energy Transfer Equity received approval for the merger from the Federal Energy Regulatory Commission (FERC) in early January. The Federal Trade Commission (FTC) and Williams shareholders have yet to weigh in. A timing agreement among the companies and the FTC has set a date of March 18 as the earliest that the deal can close.
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Williams shares traded up more than 10% early Monday to $21.77. The stock’s 52-week range is $12.77 to $61.38.

Williams Partners was up about 13% to $24.11. The 52-week trading range is $15.70 to $59.44.

Energy Transfer Equity was trading up more than 13% to $10.93, in a 52-week range of $6.60 to $35.44.