Williams Earnings Cut Nearly in Half From 2Q97
The Williams Companies was hit hard in the second-quarter like
many other energy trading companies, posting a $58 million drop in
net income from 2Q97. The company reported net income of $60.7
million, or 14 cents/share compared with $118.5 million, or 28
cents/share, for 2Q97. But a large portion of its trouble stemmed
from a FERC ruling that challenged the rate-making methodology in
some markets served by the company's petroleum products pipeline.
Williams took a $15.5 million charge to cover customer refunds
ordered by FERC, but said it plans to appeal the July 15 ruling.
Williams also still is suffering from merger-related charges. It
took a $6.1 million MAPCO merger-related charge and recorded
another $3.4 million in costs as general corporate expenses related
to the merger.
Natural gas trading profits and per-unit natural gas liquids
margins also were significantly less than the same period a year
ago. The energy services group reported $106.3 million in operating
profit compared with $115.2 million in the second quarter of 1997.
For the first six months of 1998, energy services reported
operating profit of $199.1 million compared with operating profit
of $275.9 million during the same period last year.
With the exception of market volatility, the second quarter of
this year saw many of the same energy market conditions that
negatively impacted the first quarter, such as low natural gas
liquids prices and relatively high natural gas prices, Williams
"While there are bright spots due to our growth in scale from
the acquisition of MAPCO, conditions in segments of the unregulated
energy market remain difficult," said CEO Keith E. Bailey. "Our gas
pipeline business continues to perform very well, which is
testimony to our aggressive attention to fully service existing
customers while attacking new markets in the most cost efficient
The gas pipeline segment reported operating profit of $153
million compared with $131.2 million in 2Q97. Williams attributed
the increase to the impact of expansion projects on Transco,
increased short-term firm transportation at Northwest and
adjustments relating to new rates placed into effect at Transco
Williams communications business reported a second quarter
operating loss of $10.5 million, compared with an operating profit
of $3.3 million in the same quarter of 1997.
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