The operator introduces the Williams Second Quarter Earnings 2024 Conference Call and hands it over to the first speaker, Danilo Juvane, who thanks everyone for joining. Juvane introduces the other speakers and mentions the disclaimer and non-GAAP measures included in the presentation materials. CEO Alan Armstrong discusses the company's consecutive growth and resilience, with record second quarter results driven by the strong performance of the Transmission and Storage business. The Gathering and Processing business also held up well despite challenging natural gas prices.

The article discusses the positive outlook for natural gas demand and supply, with an increase in demand and the potential for over 1 Bcf a day of supply from delayed projects. The company has successfully executed key projects and is focused on optimizing its portfolio and ensuring sustainable operations. Despite a recent court ruling, the company is confident in the future of its projects and is taking necessary steps to address the concerns. The company has seen similar court rulings in the past and believes there is limited risk for interruptions in operations.

The company has completed multiple expansions, including the Marcellus gathering expansion and the Basin transmission expansion. Two new fields in the Deepwater will also increase EBITDA. Chevron's development and Beacon's program will drive further EBITDA growth. Construction has begun on the Louisiana Energy Gateway and TLEP projects, and a precedent agreement has been signed for the Gilles West expansion. These projects will bring in additional EBITDA with minimal capital required.

In the fourth paragraph, the speaker highlights the significant emissions reductions and cost savings achieved in the quarter through their system-wide emission and emission reduction program. They also mention their progress in replacing old units with modern, low-emission equipment and their plans to file new rates for Transco at the end of the month. The company has also sold their stake in a joint venture and consolidated their ownership in another asset. They reaffirm their financial expectations for the next 5 years, with a strong growth in per share metrics. The company expects to sustain and improve their industry-leading earnings and cash flow growth beyond 2025, with potential for additional infrastructure solutions in their Transco pipeline footprint.

In the final paragraph, the speaker emphasizes the company's commitment to being a responsible operator and highlights their recently published sustainability report. They also mention their efforts in decarbonization and their belief in the natural gas industry's ability to provide affordable and reliable energy while reducing greenhouse gas emissions. The focus then shifts to the company's second quarter financial performance, with a 3.5% increase in adjusted EBITDA despite low natural gas prices. This growth was driven by their natural gas transmission and storage businesses, and year-to-date adjusted EBITDA is up 6%. The adjusted EPS was up 2% in the second quarter and 3% year-to-date, slightly slower than their 5-year CAGR of 19%. However, they anticipate a 5-year CAGR of over 12% through 2025.

The company's available funds from operations (AFFO) grew by 3% in 2Q and 4% year-to-date, following an 8% 5-year CAGR through 2023. The dividend coverage based on AFFO was strong at 2.16x in 2Q and 2.38x year-to-date. The debt to adjusted EBITDA was in line with expectations and is expected to decrease in 2025. The company's financial guidance remains unchanged, with a potential for upside to reach the high end of the adjusted EBITDA range. The company is also confident in meeting its 2025 adjusted EBITDA target. The adjusted EPS and AFFO per share are expected to come in at the high end of their ranges for 2024. The company is comfortable with reaching $7 billion in adjusted EBITDA for 2024 without any additional help from Sequent and excluding gains from the Aux Sable sale.

The company's transmission and Gulf of Mexico business saw an increase of $64 million, driven by the Hartree Golf storage acquisition and higher Transco revenues. However, this growth was offset by the impact of last year's Bayou ethane divestiture and planned downtime in the Eastern North of Mexico. The Northeast G&P business saw a $36 million unfavorable variance due to a strong quarter last year and lower gathering volumes. The West region saw a $7 million increase, thanks to the DJ transactions and higher NGL service results. However, West gathering volumes were lower due to temporary producer reductions. The company's natural gas marketing also saw a $2 million loss in line with expectations.

In the second quarter, Williams' upstream joint venture operations in other segments increased by $2 million, demonstrating the company's ability to grow in a challenging natural gas pricing environment. This success gives them confidence in their ability to reach $7 billion in adjusted EBITDA in 2024. Williams is well positioned for the future as natural gas demand continues to grow, with a strong focus on natural gas infrastructure. They have seen 11 consecutive years of adjusted EBITDA growth and a 19.5% return on invested capital in the last 4 years. Their current projects have higher returns than the previous 4 years, and their steadfast project execution has led to record contracted transmission capacity. This will continue to drive per share growth in 2024 and beyond.

The speaker concludes by stating that their business is profitable and positioned for future growth. They then open the floor for questions. The first question is about data centers, and the speaker mentions that they are looking at a few projects in addition to the one already announced. They are overwhelmed with requests for expansion in the Southeast and Atlantic regions and are trying to make sense of them. The return on their current project is better than expected, and they are considering other projects that could potentially have similar returns.

The company is focused on delivering a large project for their customers in the Mid-Atlantic and Southeast regions. However, there is also strong demand for their services in other areas, such as the Rocky Mountain states. Developers are looking for areas with a favorable permitting process, access to natural gas supplies, and available expansions on the company's systems. The focus has shifted from latency issues to speed to market for power generation and gas resources. This is an exciting time for the company as they explore new opportunities for their assets.

The speaker explains that they are focused on making the best use of their assets and ensuring high returns on their expansions. They do not want to give a specific number or timeline for these expansions as it is difficult to predict. The speaker also mentions the recent court decision and confirms that gas is currently flowing. They pass the question to their General Counsel to provide more information on the legal proceedings.

The speaker is confident that they will receive a temporary certificate from FERC and will be able to continue operating. They do not anticipate any issues with defending the certificate. The speaker also discusses production expectations for the rest of the year and into 2025, stating that they feel good about their current forecast and are prepared for potential production shut-ins from their customers.

The speaker discusses the current status of delayed TILs and completed but unconnected wells, stating that there is a lot of potential for gas production when price signals improve. They also mention that their risk basins are performing well and that they feel good about their end-of-year forecast. They address the recent request for more information from FERC regarding LEG and express confidence that it will be dismissed or deemed a gathering system. Construction on LEG is currently underway.

Spiro Dounis of Citibank asks Alan Armstrong about the company's EBITDA outlook in relation to the projected increase in electricity demand over the next 10 years. Armstrong believes there is potential for the company to exceed their current growth target of 5-7% due to the profitability of their projects and the opportunities available. He also mentions that the company's existing projects will provide a strong runway for growth in 2025-2027.

The speaker discusses the company's recent strategic planning and their optimistic outlook for future growth. They mention being conservative in their plans and expecting high profitability in the next 5 years. The speaker also mentions potential opportunities for M&A, specifically in joint ventures, and the company's focus on wise investments with their generated cash flow. They use the example of the recent acquisition of a joint venture and the possibility of future investments from their partners.

The speaker explains that the company is being patient with potential acquisitions and will only proceed if there is a willing seller. They recently acquired assets from PSX as part of a partnership and see potential for growth in these assets. They also sold an asset to Pembina at a high multiple due to its volatile cash flows. The speaker clarifies that this should not be seen as a sign that the company is interested in other assets owned by PSX.

The company is focused on maximizing value through strategic portfolio management and acquisitions. They have seen growth in storage rates and are confident in the potential for expansion in the future, but are waiting for more favorable market conditions before making large investments.

In response to a question about the potential for growth in the Deepwater sector, the operator of the call mentions several ongoing projects, including the Well and Chevron's Ballymore project, which are expected to come online soon. They also highlight the increased drilling activity in the area and the value it is expected to drive. In the past, companies focused on building large platforms, but now there is a shift towards more drilling activity.

The speaker discusses the success and profitability of their company's infrastructure in the Deepwater region, which has allowed for high incremental cash flows. They also mention the high level of activity and potential for near-term upside in the DJ region due to recent acquisitions.

The speaker discusses the strong performance of their operations in a certain area, citing increased integration value and margins from NGLs. They expect this performance to continue for a long time. They also mention an increase in rates in the Northeast, which is attributed to the completion of a cost of service agreement and a one-time drop in revenue from the previous year. They expect this to be a consistent run rate going forward, with potential for negotiated expansions. The main factor contributing to the strong numbers is the increased activity in rich gas.

The company expects their average rates to increase as they move into rich gas developments, and the inflation adjuster will also contribute to this increase. They also anticipate higher margins on rich gas, which can offset declines in dry gas. In regards to the Rockies, they see potential for receiving NGLs from the Bakken and Powder River Basin on Overland Pass. They are hopeful for a settlement regarding flow rates on Transco by the end of the month.

Micheal Dunn, speaking on behalf of the company, expressed a desire to reach a settlement in their upcoming rate case and implement a modernization tracker for emissions reduction and pipe replacement. He also mentioned that they have been discussing this with customers and believe it will help ease future rate increases. He then addressed the impact of the recent DC circuit decision and the Chevron difference case reversal on their approach to permitting.

Lane Wilson, speaking on behalf of Alan Armstrong, discusses the potential impact of the Chevron case on future permitting activities. He also addresses the Gillis West project, a small Transco expansion that offers efficiencies in terms of capital and permitting compared to a LEG project. This is important for CenterPoint, which has experienced high price spikes in the Texas intrastate market.

The paragraph discusses a project by CenterPoint to access gas supplies from the Henry Hub, which will provide reliable and less volatile access to supplies from Louisiana. This project will involve an interconnect and will diversify their supply. The project is beneficial for Texas and will help with the volatility they have experienced with suppliers. The paragraph also touches on the regulatory environment and the need for streamlining in order to better accommodate the demand for gas in the Southeast Mid-Atlantic region.

The primary issue with permitting for natural gas infrastructure is not the Federal Energy Regulatory Commission (FERC), but rather the NEPA process and its handling of environmental opposition. NEPA reform and changes to the 401 water quality certificate and judicial standards for reviewing complaints against permits are needed to prevent arbitrary project delays and lawsuits.

The speaker is optimistic about the Supreme Court taking on the NEPA review and believes it could provide relief in the future. They also mention that negotiated rate contracts will continue to be used for transmission projects and that they are exploring opportunities in various pipelines. The focus is on speed to market for data center loads, and the speaker expects good multiples for these projects.

The speaker discusses the potential impact of upcoming elections on their business, specifically in terms of taxes and legislation related to pipeline projects. They mention the need for reform in laws to allow for more pipeline infrastructure development and reference a recent bill that did not address this issue.

The speaker believes that both parties in Congress would like to do more for pipelines if possible, and they are paying close attention to potential legislative changes that could lead to reform in the permitting process. The speaker then discusses the shift towards data centers and the need for speed to market in terms of location and permitting in order to meet the growing demand for power generation from data centers, particularly from hyperscalers.

The company believes that there is a growing trend in the industry for speed to market, with a focus on areas like Wyoming where there is a lot of gas and wind resources. They also expect to see indirect load from utilities in other areas as data centers and electrification continue to grow. Additionally, there is a trend of shifting demand for gas from Texas to Louisiana due to the diversity of supply and the impact of pricing on Texas utilities. The company believes this trend will continue as utilities seek more reliable and diverse supply options.

The fluctuation in the market only occurred in Texas and not in Louisiana, giving them access to more diverse supply. This is an important takeaway from the project. The CEO, Alan Armstrong, thanks everyone for joining and highlights the exciting growth and demand for the company.

This summary was generated with AI and may contain some inaccuracies.