WILLIAMS COMPANIES, INC. Q4 FY2024 earnings call

• Winter Performance: Transco experienced unprecedented natural gas demand in winter 2024, setting all-time records with 17 of the 20 highest volume days occurring that winter, driven by a combination of heating, power generation, and LNG exports.
• Project Execution: Large-scale expansion projects like Southside Reliability Enhancement and Regional Energy Access are running at full contracted capacity, reducing emissions by avoiding fuel switching to oil and coal. 92 old compressor units were replaced to cut NOx and methane emissions.
• New Projects: Announced six new transmission projects, advanced a 10 Bcf capacity expansion in Gulf Coast storage, and made strategic acquisitions: purchased remaining 25% interest in Wamsutter upstream JV and acquired Rimrock in the DJ Basin to enhance midstream and downstream assets.
• Financial Strength: 2024 had record adjusted EBITDA, 12th consecutive year of earnings growth, and a strong balance sheet with an 18% improvement in key leverage metric, finishing favorably to 2024 guidance.

In 2024, Williams reported record adjusted EBITDA of $7.08 billion, exceeding the original guidance of $6.95 billion. The 2025 adjusted EBITDA midpoint is revised to $7.65 billion, representing a 3% increase from previous guidance, with an 8% 5-year CAGR. AFFO per share for 2024 exceeded guidance, and for 2025, it is projected to be $4.50. The Gathering and Processing business has projects like the Louisiana Energy Gateway coming online in 2025, contributing to earnings growth. The Midstream and downstream assets are bolstered by strategic acquisitions and expansion projects, driving revenue and earnings across segments.

• Adjusted EBITDA: 2025 midpoint revised to $7.65 billion, a 3% increase from previous guidance, with an 8% 5-year CAGR, driven by full year contributions from completed projects and new interstate transmission projects.
• AFFO per Share: 2025 AFFO per share projected at $4.50, covering the dividend with strong coverage, and assuming conservative cash tax assumptions.
• Projects: Eight interstate transmission projects totaling 1.25 Bcf/day to be placed in service in 2025, four deepwater projects commencing service, and continued strategic bolt-on acquisitions to enhance the business.

• Regulatory Permitting: Challenges in obtaining permits for large-scale projects could delay execution and impact growth.
• Supply Chain: Potential constraints in power generation equipment for behind-the-meter projects may affect speed to market for these initiatives.
• Commodity Price Volatility: Fluctuations in natural gas prices could influence producer decisions on drilling activity and volume contributions, affecting gathering and processing volumes.

Q: Can you talk a little bit more about the coal to gas switching opportunities and how they are progressing as you see out there?

A: Alan Armstrong mentioned significant coal-to-gas switching in MountainWest region, like conversions at Jim Bridger and Naughton coal plants in Wyoming, with strong interest from big plant operators in the area.

Q: What’s the general strategy on the E&P side just following the JV buy in? What’s kind of the long-term plan there?

A: Chad Zamarin explained the strategy is to maximize value through Midstream infrastructure by consolidating the Wamsutter basin to drive optimal Upstream development considering downstream infrastructure to capture high margins from production.