Thursday, Natural gas exploration and production company Williams Companies, Inc. (WMB), said it now expects the lower end of fiscal year 2009 recurring adjusted earnings above its previous projection, reflecting improvements in the Exploration & Production and Midstream results for the remainder of the year. Williams also provided earnings and capital expenditure guidance for 2010 and 2011, and said it now expects sharply higher profitability over the next two years based on its expectations for energy commodity prices, which are consistent with recent forward market prices.
The Tulsa, Oklahoma-based company now expects recurring adjusted earnings for the fiscal year 2009 to be $0.75 - $0.90 per share, up from its earlier forecast of $0.70 - $0.90 per share. On average, nine analysts polled by Thomson Reuters expect the company to earn $0.88 per share for fiscal 2009. Analysts' estimate typically exclude one-time charges and gains.
While announcing the second quarter results on August 6, the company had raised its 2009 outlook for earnings to a range of $0.70 - $0.90 per share from the prior range of $0.55-$0.95 per share.
The company's recurring income from continuing operations for the fiscal year 2009 is expected to be $336 million - $426 million, while income from continuing operations after mark-to-market adjustment for the full year is expected to be $449 million - $539 million.
For the second-quarter, Williams had reported a 67% drop in profit, hurt by lower energy commodity prices that saw a steep decline in profit at its two major segments. The company's second-quarter net income attributable to Williams plunged to $142 million or $0.24 per share from $437 million or $0.73 per share in the same quarter last year.
Recurring income from continuing operations for the quarter after mark-to-market adjustments declined to $116 million or $0.20 per share from $399 million or $0.67 per share in the prior year.
The company's recurring income from continuing operations after-tax mark-to-market was $120 million or $0.20 per share, down from $390 million or $0.66 per share in the previous year quarter.
At Exploration & Production, which includes natural gas production and development in the U.S. Rocky Mountains, San Juan Basin, Barnett Shale, and Marcellus Shale, as well as oil and gas development in South America, segment profit for the quarter dropped to $119 million from $496 million in the previous year. The company attributed the decline to much lower net realized average prices for natural gas, partially offset by higher production volumes.
Midstream Gas & Liquids, which provides natural gas gathering and processing, deepwater production handling and oil transportation, natural gas liquids or NGL fractionation and storage services and olefins production, reported $137 million in segment profit, a sharp decline from $270 million in the previous year. The company attributed the decline to much lower net realized average prices for natural gas, partially offset by higher production volumes.
Williams also said it forecasts a slight increase in 2009 capital expenditure, reflecting the addition of $275 million associated with the recently announced acquisition of additional properties in the Piceance Basin. The company now expects recurring adjusted segment profit for fiscal year 2009 to be $1.53 billion - $1.80 billion while capital expenditures and investments are anticipated to be $2.50 billion - $2.75 billion.
While providing outlook for 2010-11, Williams said it demonstrates the earnings power of its natural gas businesses. Furthermore, by 2011 the company said it expects to be approaching the record-level earnings and value creation it achieved during 2008, even though price assumptions are well below those levels.
Looking ahead for the fiscal year 2010, the company expects to report recurring adjusted earnings in the range of $0.80 - $1.90 per share. Analysts currently anticipate the company to earn $1.21 per share for the fiscal year 2010.
Recurring adjusted segment profit for the fiscal year 2010 is expected to be $1.58 billion - $2.78 billion, while capital expenditure and investments is anticipated to be $1.90 billion - 2.68 billion.
For the full year 2011, the company expects to report recurring adjusted earnings in the range of $1.10 - $2.65 per share. The company forecasts recurring adjusted segment profit to be $1.85 billion - $3.45 billion, while capital expenditures and investments is anticipated to be $2.30 billion - $3.80 billion.
William's said the projections for fiscal years 2010 and 2011 are based on gas price range midpoints of $5.75 and $6.50 per MMBtu.
WMB closed Wednesday's trading at $17.12 on the NYSE. In the past 52 weeks, the stock trended in a broad range of $0.00 - $28.50, with a three-month average volume of 5.79 million shares.
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