In the wake of the current turmoil surrounding Williams Cos., Williams Energy Partners LP took the chance to inform the investment community that it is an “extremely healthy” stand-alone company. The partnership held an unscheduled conference call last week to address investment concerns that dropped the company’s stock price by $6 (more than 19%) in Tuesday trading.

“As we sit here today, Williams Energy Partners is extremely healthy,” said CEO Don Wellendorf. “Our earnings and cash flow look good and the WPL [Williams (oil) Pipe Line] acquisition is performing as we expected. As a stand-alone entity, Williams Energy Partners is performing just as I think investors have anticipated it would.”

The reassurance investor call came on the heels of the larger Williams’ second quarter outlook released earlier in the week, which precipitated a stock price drop-off to a 20-year low in trading that day and sparked speculation that cash-strapped Williams could become the target of a takeover. On Tuesday, Williams Cos. took on more water as Standard & Poor’s reduced the company’s corporate credit rating to “BB+” — junk-bond status — from “BBB,” citing liquidity concerns. Late Thursday, S&P again lowered the corporate credit rating for Williams Cos., this time cutting it three notches to single ‘B+’ from ‘BB+’ junk bond rating.

Wellendorf said that during 2001, business for the partners from Williams generated $54 million in revenues for the partnership. The executive said that translates to approximately $33 million in earnings before interest, taxes, depreciation and amortization (EBITDA). He added that if Williams limited its business, or got out of some segments entirely, it would not affect Williams Energy Partners greatly. He said of the $33 million, he expects only about $4.5-5 million will go away in 2002 and about $3 million in 2003.

Referring to movement on Williams Pipe Line that is conducted by the larger company’s refinery, which produces $5 million in EBITDA, Wellendorf said that if “Williams stopped making those moves, somebody else would make those moves and fill in that market space. There would be a little time that it would take to replace Williams as a customer, so in 2002, we would only see about $800,000 of reduction out of that $5 million if Williams stops that business, then in 2003, we think we could fill it back in completely.”

Likewise, Wellendorf said it has approximately $13 million associated with Williams Energy Marketing and Trading group, which leases storage from the partnership under a long-term storage contract. The executive said that as things stand right now in the storage market, even if Williams was to pull out, he believes they could fill that space “quickly.”

He said he believes the partnership’s financing is in good shape and hopes to receive a rating from the credit rating agencies in about a month or so. “Just because of the noise around Williams, will customers be squeamish about doing business with us?…We don’t expect that this will happen,” Wellendorf concluded.

Williams Energy Partners LP has scheduled its second quarter 2002 earnings conference call for Monday (July 29) at 2 p.m. EDT.

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