Williams saw its earnings jump 63% in the third quarter, mainly due to its acquisition of Denver-based producer Barrett Resources Corp. and strong earnings from its Energy Marketing & Trading segment, which was broken out as the company’s third industry group in September. The earnings gave Williams the impetus to raise its 2001 earnings forecast to the current consensus of $2.40 a share from a previous $2.30-$2.35 a share, and it reiterated a 15%/year earnings growth goal beginning in 2002.

The Tulsa-based company said net income was $221.3 million, compared with $121.1 million in the year-ago period. Earnings were 44 cents per diluted share compared with 27 cents per share. Excluding $94 million in write-downs and other charges, Williams reported recurring third quarter results of 65 cents a share. Most of the writedown came from a reduction in the market value of Williams’ broadband investment in Williams Communications Group. In March, the Williams board approved a tax-free spinoff of the communications group.

In the conference call with the investment community, CEO Keith Bailey said that the “turmoil in the capital markets” made the earnings report “timely” on Thursday, calling the company’s earnings “terrific.” He noted that Williams had beat analysts’ forecasts by 24%. COO Steven Malcolm agreed, pointing out that the company’s earnings “highlight the balanced and diversified nature of Williams’ earning stream.”

Malcolm said earnings in the marketing activities had accounted for about “half of the profitability” of the company. “We made money in all phases of the energy value chain,” he said, noting that “over the last several quarters, the major contributors” to Williams’ earnings had varied between pipeline services, energy services, exploration and production and marketing and trading.

Within the Exploration & Production segment, Williams reported third-quarter profit of $59.9 million, up from $18 million a year ago, mostly because of its newest subsidiary, Barrett Resources (see NGI, May 14). Williams completed its acquisition of Barrett in August.

Energy Marketing & Trading, which provides energy commodities marketing and trading and price-risk management services, reported third quarter segment profit of $357.2 million compared with $147.1 million a year ago. Most of the increase came from higher earnings in proprietary natural gas and power trading activities, including $180 million in revenues associated with power sales in California that resulted from additional guidance regarding the state’s credit responsibility for power sales to major utilities. Also reporting a profit was Energy Services, with earnings of $215.9 million in the quarter, up from $168.4 million a year ago.

Gas Pipeline earnings were down, but Bailey was not complaining. The unit, which provides transport and storage services throughout the United States, reported a third quarter profit of $137.7 million, compared with $153.4 million a year earlier. Bailey noted that the reduction was “almost entirely due to matching contribution commitments to local United Way agencies across America, reflecting the record level of funds raised by employees.” In 2000, matching contributions were made during the fourth quarter.

©Copyright 2001 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.