Steve Malcolm, 62, who guided Williams Cos. from the brink of financial collapse in 2002 to becoming one of the leading natural gas operators in the country, announced that he will retire as CEO and chairman in December.
Alan Armstrong, 48, president of Williams’ midstream operations, was named the new CEO. Frank MacInnis, 63, who has been a director since 1998, will assume the chairmanship.
Armstrong also was named chairman and CEO of Williams Partners GP LLC, a company unit and the general partner of Williams Partners LP. He has led the midstream operations of Williams Partners GP since it was formed in 2005.
Malcolm took over as CEO and chairman of the Tulsa-based company in early 2002. He joined the company 26 years ago as the director of business development and became the CEO of Williams Energy Services in 1998. In September 2001 Malcolm was promoted to COO of Williams Cos. (see Daily GPI, Sept. 21, 2001). And he quickly made his mark. Faced with the “new reality in financial markets,” which he blamed on Enron Corp.’s bankruptcy in November 2001, Williams by year’s end had cut its 2002 capital spending program by 25% and readied the sale of several noncore assets (see Daily GPI, Dec. 20, 2001).
As the energy market upheaval continued to roil the industry, Malcolm took over as CEO (see Daily GPI, Jan. 23, 2002). He then proceeded to right the flailing company, making deals to sell a bevy of assets over the next two years that included the treasured Kern River Gas Transmission system to Berkshire Hathaway’s MidAmerican Energy Holdings Co.. Malcolm said at the time the company was “prepared to do whatever it takes” to improve its balance sheet (see Daily GPI, March 11, 2002).
However, financial matters were not the only things on Malcolm’s plate. He also navigated the investigation of Williams’ bogus “wash” energy trade transactions and was among the first in the industry to admit to engaging in questionable trading (see Daily GPI, May 21, 2002). Through the rest of 2002 and into 2003 Malcolm and his team responded to each financial crisis with a process to restore financial strength and increase investor confidence. Among other things Williams cut its earnings guidance, reduced its workforce and continued to sell prized assets, including more gas pipelines and gas properties.
As some energy companies disappeared or were acquired by more financially able partners, by May 2003 Williams Cos. appeared to have righted itself. It paid off a high-interest, short-term $1.17 billion loan from a group of investors led by Berkshire Hathaway (see Daily GPI, May 21, 2003), and it reported a return to profitability for the second quarter of 2003 (see Daily GPI, Aug. 13, 2003).
Malcolm’s leaner business model, which by then was $6 billion worth of assets lighter, now focuses on three core natural gas businesses: exploration and production, midstream and interstate gas pipelines.
“It has been my privilege to serve with so many talented people in staff, management and board roles over the course of my career at Williams,” said Malcolm. “Together, we have accomplished a great deal and have created opportunities for even greater achievements in the future. They provide a continued source of inspiration to me and others and fill me with confidence that the future for Williams and Williams Partners will be bright.”
W.R. Howell, the lead director on Williams’ board, noted that Malcolm had “assumed the top leadership role at Williams in the midst of an extraordinarily challenging period in this 102-year-old company’s history. With courage, resolve and an unwavering focus on opportunities for sustained growth, Steve built a strong management team and led Williams’ financial turnaround and strategic refocusing. Under his leadership, Williams honed its focus on natural gas businesses and earned a track record of both growth and a level of financial discipline that allowed the company to recapture and sustain its investment-grade status.”
Armstrong joined Williams in 1986, following his graduation with a degree in civil engineering from the University of Oklahoma. He has served in various technical, operating and commercial roles during his tenure at Williams and has served in leadership positions in several industry associations, including his current role as president of the Gas Processor’s Association and on the board of the Natural Gas Supply Association.
“Having worked closely with Steve as a member of the Williams management team for the last 15 years, I have a deep appreciation for his intense focus, discipline and resulting achievements,” Armstrong said. “His compassion and commitment to making Williams a great place for people to grow through challenging, fulfilling careers in a workplace that lives up to its core values and beliefs every day is a tradition that I look forward to continuing.”
In a note to clients Goldman Sachs analysts said, “From a strategic standpoint, we believe the decision to elevate Mr. Armstrong to CEO in part signals that the Williams’ board of directors remains positive on the long-term outlook for its natural gas infrastructure businesses.”
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