Williams’ transmission projects to drive 2024-2025 growth

Despite low natural gas prices, Williams Cos. reached new highs for both gathering volumes and contracted transmission capacity in 2023, growing 6% YOY to 18 Bcf/d and 32% YOY to 32.3 Bcf/d, respectively. Both helped drive record adjusted EBITDA of $6.78 billion, up 6% YOY. The company reported net income of $3.2 billion on revenue of $10.9 billion in 2023, compared to 2022 net income of $2.1 billion on revenue of $11 billion. Cash flow from operations grew 24% YOY to $6.1 billion. The company exited the year with $23.4 billion in long-term debt and a debt-to-adjusted-EBTIDA ratio of 3.58x compared to $21.9 billion and 3.55x at YE22.

Capex for 2023 came to $2.6 billion, including $1.9 billion in growth spending. In 2024, Williams expects to spend $1.45-1.75 billion on growth and $1.1-1.3 billion on maintenance, including $350 million for emission reduction or modernization projects. Guidance for 2025 has growth capex of $1.65-1.95 billion and maintenance allocated $750-850 million, including $100 million for emissions reductions or modernization.
Williams expects transmission projects to drive 2024-2025 growth, with CEO Alan Armstrong calling 2025 a breakout year as several fee-based projects start up. The company currently has 18 high-return growth projects underway, including 3.1 Bcf/d in Transco expansions. Two projects were brought online as it closed out 2023, and one has started up already in Q1.

Phase 1 of the Regional Energy Access project came into service in 4Q23, and Phase 2 will come online in 4Q24, together adding 830 MMcf/d of capacity on the Transco system from the northeast Marcellus producing region to markets in Pennsylvania, New Jersey and Maryland. Also in Q4, expansions on the Cardinal and Susquehanna gathering and processing systems entered service, adding 150 MMcf/d of capacity in eastern Ohio supporting Encino Energy’s Utica operations and 320 MMcf/d in northeast Pennsylvania’s dry gas Marcellus. The first startup of 2024 was Carolina Market Link, a 78 MMcf/d transmission project that services residential and commercial demand in the Mid-Atlantic region.

Williams has also progressed a Transco expansion this quarter, pre-filing with FERC for the 1.6 Bcf/d Southeast Supply Enhancement project. New firm transportation capacity would be provided from Transco Station 165 Zone 5 Pooling Point and the Cherrystone interconnect with the Mountain Valley Pipeline, both of which are in Pittsylvania County, Virginia, and would be delivered along four paths in Virginia, North Carolina and Alabama. The work scope includes added compression at existing sites, facilities modifications and two new pipeline segments totaling 54.6 miles. Startup is targeted for November 2027.
The company has received FERC certificates for Transco’s 105 MMcf/d Commonwealth Energy Connector, 423 MMcf/d Southside Reliability Enhancement, 150 MMcf/d Southeast Energy Connector and 364 MMcf/d Texas to Louisiana Energy Pathway.