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Category: Investment, Natural Gas
Senior Energy Executive Karl W. Miller makes the call on Williams Companies (NYSE: WMB): WMB Board of Directors Announces Additional Positive Restructurings
January 19, 2010
Energy Commentary from Karl Miller - Read Bio and More info
On January 14, 2010, Mr. Miller published analysis "Natural Gas Pipelines: Some Get It and Some Don't" and provided a Buy opinion for Williams Companies (NYSE: WMB). In his opinion, Mr. Miller cited that he believed WMB management and Board of Directors had been appropriately overhauled, gotten its combined act together after years of languishing and put serious focus on its two core businesses; I) transporting natural gas on its mainline pipes and; II) natural gas exploration and production, with very stated high drilling success rates.
In the same analysis, Mr. Miller issued a sell opinion on Southern Union Company (NYSE: SUG), given the extremely poor corporate governance, poor return on assets and poor return on equity, among other serious problems.
Mr. Miller further cited his opinion that SUG was a breakup candidate, as its assets are worth more to investors on an individual basis, and investors should exit and wait until a legitimate bidder (s) re-emerge targeting to acquire SUG assets and/or activist investors launch a Proxy contest to remove the Board of Directors and completely restructure the Company.
To see Mr. Miller's full analysis published on January 14, 2010 go to:
http://www.naturalgasstocks.com/Karl_Miller/news/10-01151.asp
Today, as further evidence that WMB "gets it", its Board of Directors announced a further comprehensive restructuring of the Company and its master limited partnerships to further drive growth and unlock shareholder value.
Highlights of WMB further restructurings announced January 19, 2010 include:
- Williams to modify and accelerate its MLP strategy; contribute its premier interstate gas pipeline, domestic midstream assets and interests to Williams Partners in $12 billion restructuring
- Williams Partners to become leading diversified MLP with approximately $2 billion of 2010 segment profit plus DD&A (forecast pro-forma) and strong growth outlook
- Williams to own approximately 80% of new, much larger Williams Partners, up from 24% of current partnership
- New structure to significantly enhance growth prospects for both Williams and Williams Partners:
- New self-funding Williams Partners will have reliable access to capital markets, lower capital costs, and greater ability to pursue development projects and acquisitions; expects investment-grade credit ratings
- Williams can allocate more capital to exploration and production business for growth and diversification; expects to retain investment-grade credit ratings
- Williams' previous '09-'11 recurring guidance is unchanged; Williams Partners announces distribution increase, 2010-11 guidance with '09 guidance unchanged
Given WMB further restructuring announced today, Mr. Miller re-confirms his Buy Opinion for WMB and affiliates, and continues to keep a Sell Opinion for SUG for reasons cited in his January 14, 2010 analysis.
Mr. Millers Office
Disclaimer:
This column, Energy Commentary from Karl Miller, is the opinion of Karl Miller.
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