Williams Analyst Day

95 Pages·2014·6.82 MB·English

Williams Analyst Day
May 14, 2014
© 2014 The Williams Companies, Inc. All rights reserved.
Williams Analyst Day
May 14, 2014
New York City
Agenda
Continental Breakfast
Welcome and Introductions John Porter
CEO Perspective Alan Armstrong
NGL & Petchem Services John Dearborn
Break
Northeast Gathering & Processing Jim Scheel
Break to get box lunches
West Allison Bridges
Atlantic-Gulf Rory Miller
Access Midstream Partners Michael Stice
Financial Outlook & Wrap Up Alan Armstrong and
Don Chappel
2 Williams Analyst Day | 5/14/14 © 2014 The Williams Companies, Inc. All rights reserved.
Forward-looking Statements
> The reports, filings, and other public announcements of The Williams Companies, Inc. (Williams) and Williams Partners L.P.
(WPZ) 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 of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. We make these forward-looking statements in reliance on the
safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. You typically can identify forward-
looking statements by various forms of words such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,”
“estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,”
“will,” “assumes,” “guidance,” “outlook,” “in service date” or other similar expressions. These forward-looking statements are based
on management's beliefs and assumptions and on information currently available to management and include, among others,
statements regarding:
– Amounts and nature of future capital expenditures;
– Expansion and growth of our business and operations;
– Financial condition and liquidity;
– Business strategy;
– Cash flow from operations or results of operations;
– The levels of dividends to Williams stockholders and of cash distributions to WPZ unit holders;
– Natural gas, natural gas liquids, and olefins prices, supply, and demand; and
– Demand for our services.
> Forward-looking statements are based on numerous assumptions, uncertainties and risks that could cause future events or results
to be materially different from those stated or implied in this presentation. Many of the factors that will determine these results are
beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the
forward-looking statements include, among others, the following:
– Whether Williams has sufficient cash to enable it to pay current and expected levels of dividends;
– Whether WPZ has sufficient cash from operations to enable it to pay current and expected levels of cash distributions, if any, following establishment of
cash reserves and payment of fees and expenses, including payments to WPZ’s general partner;
– Availability of supplies, market demand, and volatility of prices;
– Inflation, interest rates, and fluctuation in foreign exchange rates and general economic conditions (including future disruptions and volatility in the
global credit markets and the impact of these events on our customers and suppliers);
– The strength and financial resources of our competitors and the effects of competition;
3 Williams Analyst Day | 5/14/14 © 2014 The Williams Companies, Inc. All rights reserved.
Forward-looking Statements (cont’d)
– Whether we are able to successfully identify, evaluate and execute investment opportunities;
– Ability to acquire new businesses and assets and successfully integrate those operations and assets into our existing businesses, as well as
successfully expand our facilities;
– Development of alternative energy sources;
– The impact of operational and development hazards and unforeseen interruptions;
– Costs of, changes in, or the results of laws, government regulations (including safety and environmental regulations), environmental liabilities, litigation,
and rate proceedings;
– Williams’ costs and funding obligations for defined benefit pension plans and other postretirement benefit plans sponsored byits affiliates;
– WPZ’s allocated costs for defined benefit pension plans and other postretirement benefit plans sponsored by its affiliates;
– Changes in maintenance and construction costs;
– Changes in the current geopolitical situation;
– Our exposure to the credit risk of our customers and counterparties;
– Risks related to financing, including restrictions stemming from our debt agreements, future changes in our credit ratings and the availability and cost of
capital;
– The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate;
– Risks associated with weather and natural phenomena, including climate conditions;
– Acts of terrorism, including cybersecurity threats and related disruptions; and
– Additional risks described in our filings with the Securities and Exchange Commission (SEC).
> Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in anyforward-
looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and
do not intend to update the above list or to announce publicly the result of any revisions to any of the forward-looking statements
to reflect future events or developments.
> In addition to causing our actual results to differ, the factors listed above may cause our intentions to change from those
statements of intention set forth in this announcement. Such changes in our intentions may also cause our results to differ. We
may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise.
> With respect to WPZ, limited partner interests are inherently different from the capital stock of a corporation, although many of the
business risks to which WPZ is subject are similar to those that would be faced by a corporation engaged in a similar business.
> Investors are urged to closely consider the disclosures and risk factors in Williams’ and WPZ’s annual reports on Form 10-K filed
with the SEC on Feb. 26, 2014, and each of our quarterly reports on Form 10-Q available from our offices or from our websites at
www.williams.com and www.williamslp.com.
4 Williams Analyst Day | 5/14/14 © 2014 The Williams Companies, Inc. All rights reserved.
2014 Analyst Day
Alan Armstrong
President and Chief Executive Officer
CEO Perspective
Williams well-positioned to participate
in once-in-a-generation industry supercycle
> Right long-term strategy at the right time
> Ideally positioned assets, sustainable competitive positions
> Market dynamics serve as tailwinds
> Hard-wired focus on operational excellence, project execution
> $25+ billion of potential growth – disciplined capital allocation
> Strong leadership in place to capture the value opportunity
All the Right Ingredients to
Deliver Sustained Value Growth
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CEO Perspective
Strong, Capable Senior Management
John Jim Allison Rory Don
Dearborn Scheel Bridges Miller Chappel
NGL &Petchem NEGathering & West Atlantic–Gulf Chief Financial
Services Processing Operating Area Operating Area Officer
Fred Brian Frank Robyn Craig
Pace Perilloux Billings Ewing Rainey
Engineering Operational Corporate Strategic StrategicServices General
& Construction Excellence Development & Administration Counsel
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CEO Perspective
Diverse, Large-Scale Strategic Positions
Delivering Value Today, Ongoing Growth
Marcellus-Utica Zoom-in View
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CEO Perspective
Williams’ Operations Create
Broad Market Vantage Point North America
Large-Scale
Open Access
Open Markets
20% U.S. Dry-Gas Volumes Touch Our Systems
Transmission Pipelines and Storage
Market Hub
End User
Natural
Gas
Ethylene
Propylene
Mixed Multiple
Natural Gas Products
Wellhead Gathering Gas Treating Gas Processing Liquids Fractionation Facilities Transmission Pipelines Olefins Plant End User
(onshore and Plants Plants Storage Market Hub
offshore)
11 Bcf/d 7 Bcf/d inlet 418 231 Mbbl/d 22MMbbl 386 (lbs/year) 395MM lbs
Mbbl/d Mbbl/d ethylene
370 Mbbl/d 1,900 MM storage
ethylene
24 storage
815 MM
customers
propylene
7 exchange
Figures represent 100% capacity for operated assets, including those in which Williams has a share of ownership; NGL and partners
derivatives storage includes capacity owned and that under long-term lease; olefins-plant volumes are inclusive of Geismar,
La., facility at full operation and expansion.
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CEO Perspective
Market Dynamics Drive Sustained Opportunity
INFRASTRUCTURE
RENEWS
Supply ECONOMIC
VIABILITY, NEW
SUPPLIES
Short Term Long Term
Expect continued Expect improving EXPORTS
cross currents as natural gas prices to NEEDED
new demand and drive healthy, more
new infrastructure sustainable supply and
drive volatility in demand growth
commodity prices
MARKET
DYNAMICS
CREATING
Demand
DEMAND FOR
NATURAL GAS
AND NGLS
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CEO Perspective
We Are Well-Positioned
to Benefit From Supply Growth
NATURAL GAS – U.S. SUPPLY GROWTH (Bcf/d)
Direct
CAGR CAGR Ownership Investment
3% 3%
120
’09-’13 ’14-’30
+17% +58%
100 (cid:160)Northeast
+9.5 +39.8 Bcf/d
Bcf/d (cid:160)Rockies
80 (cid:160)San Juan
(cid:160)Gulf of Mexico
60
(cid:160)Fort Worth
(cid:160)Mid-Continent
40
(cid:160)Gulf Coast
(cid:160)Permian
20
(cid:160)WestCoast
0 (cid:160)Alaska
2000 2005 2010 2015 2020 2025 2030
Source: Wood Mackenzie North America Gas Service. Note: Excludes Canadian import volumes of approximately 4.5 Bcf/d (at 2014 levels).
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CEO Perspective
Demand Shows Up in Response to Supply, Price;
105 Bcf/d on Conservative 2% CAGR
U.S. GAS DEMAND (Bcf/d)
CAGR CAGR
2.5% 2%
120
’09-’13 ’14-’30
+14% +47%
100 Other
+8.5 +33.5 Bcf/d Transport
Bcf/d LNG Exports
80
Power
60
40
Industrial
20 Commercial
Residential
0
2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030
Source: Wood Mackenzie North America Gas Service
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CEO Perspective
Growing NGL supplies require big infrastructure
U.S. NGLs Supply Growth
Mbbl/d
5,000
4,500
4,000 Ethane Rejection
3,500 Ethane
3,000
2,500
2,000 Propane
1,500
1,000 Butane
500
Pentane
0
2008 2012 2016 2020 2024 2028
Source: EIA, Wood Mackenzie NGL Service; Williams Research
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CEO Perspective
Upstream Shale Innovation Changes Everything
Our Value-Chain Footprint and Scale Create Unique Advantages
THEN NOW
> The few, the integrated – > Many, relatively smaller
Supply the super-majors upstream-focus
Development > Muted sensitivity > Greater sensitivity
to price signals to price signals
> Efficient, supply-sponsored > Large-scale infrastructure
Infrastructure build-out of large-scale requires sponsorship beyond
Development infrastructure supply side
> Closed, proprietary systems > Open-access systems
> Benefits concentrated to a few > Broad benefits to many across
the value chain
Market
> Go-it-alone > Structured transactions
Structure
share risk across value chain
> Zero-sum game > Win-win
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CEO Perspective
Discontinuity in Value Chain
as Infrastructure Gaps Yield Market Barriers
U.S. SHALE NGLs
PRICE SIGNAL TO PRODUCERS IN PERIL
RIGS MOVE TO OIL PROSPECTS
RAIL TRANSPORT SCALABILITY
Supply Market
Demand
Shows Access
Builds
Up Lags
> 4+ MMbbl/day Infrastructure > $125 billion
by 2020 investment 2014–35: in petchem
investments
> Low-cost gas > $313 billion
drilling, high NGL natural gas > 148 factories and
margins plant expansions
> $56 billion NGLs
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CEO Perspective
Our Strong Competitive Position
Creates Advantages to Clear Barriers
INFRASTRUCTURE
Clear, Efficient Price Signals
Supply Demand
Open, Transparent Markets
Connect & Help Grow
BEST SUPPLIES & Critical Role to
Ensure Supply
BEST MARKETS
Infrastructure
Investment
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CEO Perspective
Our Strategy – More Relevant Than Ever
Big Picture
> Be the premier provider of reliable large-scale infrastructure designed to maximize
the opportunities created by the vastly greater supply of natural gas and natural gas
products now known to exist in North America’s unconventional resource plays
Underpinned by Scale, Competitive Advantage
> Be big – the No. 1 or 2 largest – in gathering, processing and transportation in basins
and markets where we operate
> Grow position in areas where we have unique competitive advantages
> Maximize returns in established markets where we have the No. 1 or No. 2 position
Strategy Is Well-aligned with the Commodity Environment
> Well-positioned to capture current opportunities associated with ethane cracking
> Rapidly growing fee-based business
> Low prices grow demand in natural gas, NGLs, olefins – all infrastructure-constrained
> Natural gas products price-advantaged against crude and naptha products
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CEO Perspective
Number of Recent Incidents Is Unusual
Williams Has Track Record of Safe, Reliable Operations
# INCIDENTS / 1,000 MILES RELEASE VOL (MCF Gas / Mi)
0.6
10.4
0.6
0.5
0.5
8.3
0.5 7.9
0.4 0.4 6.8
6.5
0.3 5.6
0.3 4.2
S Y S Y
M R 0.1 M R
A ST A ST
LI U LI U
L D L D
WI N WI N 0.3 0.0 0.1
I I
2010 2011 2012 2013 2014* 2010 2011 2012 2013 2014*
*Through 3/31/14, annualized
PHMSA reports a total mileage of interstate natural gas pipelines of approximately 198,442 (PHMSA website -accessed 4/11/2014)
The numbers above are based on incidents reported to PHMSA under 49 CFR 19; An incident is an event where an unintentional release
of natural gas results in: A death or personal injury resulting in hospitalization; Estimated property damage of $50,000 or more; Gas loss
of 3 MMCF or more; Results in an emergency shutdown of a LNG facility
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