Williams Companies, Inc. (The)

Good day, and welcome to Williams' third quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to Danilo Javan. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining us and for your interest in the Williams Company. This morning, we release the earnings, the press release, and the presentations that our president and CEO, Alan Armstrong, will kick off in a moment. Also joining us in the call, John Porter, our chief financial officer, Micah Dunn, our chief operating officer, and Chad Zimmer, our executive vice president of corporate strategic development. In our presentation materials, you'll find a disclaimer related to forward-looking savings. This disclaimer is important and integral to our remarks, and you should review it. Also included in the presentation materials are non-GAAP measures that would reconcile the generally accepted accounting principles. And these reconciliation schedules appear at the back of today's presentation materials. So with that, I'll turn it over to Alan Armstrong.

Great. Well, thanks, Danilo, and thank you all for joining us today. A lot of positive updates to walk through with you this morning as we delivered another record quarter of adjusted EBITDA. driven primarily by our natural gas transportation expansions and Gulf Coast storage acquisition. In fact, our better than planned execution on growth projects and higher than expected performance on acquisitions, along with core business strength, gives us the confidence to once again raise our guidance midpoint for 2024, which John will detail in his remarks. The returns of our projects and acquisitions have been strong enough to overcome what has been a very challenging natural gas price environment and fairly impactful hurricane season. So very pleased to see the way our entire portfolio responded in this environment. In fact, a recent Wells Fargo note on midstream returns supports our view that Williams has delivered one of the best cash returns on invested capital in the sector generating a 22.9% return for the 2018 through 23 period, nearly double the sector median of 11.9%. And looking here at slide two, I'll start by noting that the strong cash returns expected within the suite of our recently completed projects will lead to visible five-year EBITDA CAGR of over 7% at the midpoint of our 2025 guidance. all without equity issuance and while improving our credit metrics during this period. Additionally, this pace of growth has been right into the headwinds of low gas prices and production curtailments this year. The drivers of growth for next year are clear and fully contracted. These include the following projects where the CapEx and construction risk is behind us. And in fact, in August, we placed Transco's regional energy access into full service ahead of schedule and under budget, ensuring clean and reliable natural gas is available to serve the Northeast region for the upcoming winter heating season. We were also successful in placing a portion of the Southside Reliability Enhancement Project in service, as well as completing our Mountain West Uinta Basin expansion. And in the deep water, we've completed all of our construction for the Very Large Well project, and we are excited to see shale begin ramping up production in December. And as we mentioned on our last call, there are now two new fields on our discovery system that started up in the third quarter. Chevron's large anchor development and Beacon's Winterfell five-well program are all fully connected and will help drive a large increase in EBITDA in 2025 as these programs also begin to ramp up. Beyond these drivers for 2025, We already have a total of 5.3 BCF a day of contracted gas pipeline projects that will drive a high rate of growth for the next five years. These include the following. First, on Southeast Supply Enhancement Project, or SESI, we filed the FERC application for its 1.6 BCF a day expansion of existing Transco capacity in Virginia, North Carolina, South Carolina, Georgia, and Alabama. CESE is a fully contracted and will provide record EBITDA contributions from a Williams transmission project that demonstrates how valuable contracted capacity is going to continue to be in the next wave of demand growth that we are just now starting to see the benefits of. And as we mentioned before, this singular project will generate EBITDA greater than our entire Northwest pipeline system, and in fact, by itself, CESI would be the equivalent to the 10th largest long haul pipeline in our nation on its expected EBITDA contribution alone. This project is a good representation of some of the amazing growth opportunities that will continue to drive growth well into the future. Utilities across the Mid-Atlantic and Southeast markets have come out saying they missed their growth targets for power generation, and we're extremely well positioned to serve these customers with projects like CESI, starting at station 165 and delivering volume south as they take advantage of the new supplies coming in from Mountain Valley Pipeline. Moving down the list, we received our FERC order certificate from the Mountain West Overthrust westbound expansion, and that is a project that will add approximately 325,000 dekatherms of fully contracted firm transportation service on this Mountain West system by the fourth quarter of 25. And we began construction on several key projects, including our Louisiana Energy Gateway gathering system, where we were pleased to receive the FERC order in late September that confirmed this system is exempt from FERC's jurisdiction. So we are full steam ahead with an expected in-service date in the second half of next year. Construction is also well underway on Transco's Commonwealth Energy Connector project in Virginia. And I'm pleased to announce that we've entered into binding agreements with three new expansion projects on the Northwest Pipeline recently, totaling roughly 260 million cubic feet a day of firm capacity. These are small projects individually, but very strong in terms of the collective returns that these projects will generate. So really nice to see the very strong signs of growth showing up now. in the Intermountain region on both Northwest and on our Mountain West acquisition. For some time now, we've talked about just how attractive the current macro environment is in supporting the long-term growth in our businesses as the line of sight to LNG exports, coal to gas switching, industrial reshoring, and data center demand becomes clearer and clearer. The recently signed precedent agreements for an expansion of the existing Dalton lateral that will serve northern Georgia is a great example of this. Just like CESE, this is another project that leverages off of our existing system to provide high returns and demonstrate the path we are on to deliver many more fully contracted transmission projects that will provide attractive earnings growth beyond the end of this decade. And finally, we recently signed commercial agreements with Lakeland Electric, a Florida-based utility, who we will partner with in the development of a 75-megawatt solar farm. The project, which will be designed and built by Williams, is sited on land that's been owned by Williams for decades and that was unsuited for traditional real estate development, but it is an ideal site for solar and energy production in an area that has got a tremendous amount of demand growth. Our list of prospects beyond these newly contracted deals continues to grow fast, and the environment for demand-driven projects is much better than the environment that has driven the 22.9% cash return on invested capital and the over 7% CAGR of growth across our business. So we really want to stress that while we've had a great run here in the last five years of growth, The environment that is in front of us right now and the kind of opportunities we're seeing is much stronger than what we've seen in the period that's generated these kind of opportunities. So we are really excited to be able to deliver up against the demand that is growing very rapidly in the space we're in right now. And with that, I'm going to turn it over to John to walk through the third quarter financial.