Williams, WPX Chalk Up Progress on Transco Expansions, Permian Exploration

Researched by Industrial Info Resources (Sugar Land, Texas)--Williams Companies (NYSE:WMB) (Tulsa, Oklahoma), its master limited partnership Williams Partners (NYSE:WMZ), and WPX Energy Incorporated (NYSE:WPX), an exploration and production company that spun off from Williams in 2011, saw overall declines in earnings after they spent the past year shedding their less profitable assets and reducing their exposure to commodities. But WMB and WMZ are making solid progress on expansions to the Transco Natural Gas Pipeline, while WPX is growing in a prosperous shale play. Industrial Info is tracking $3.1 billion in active projects involving the three companies, including more than $2 billion nearing or under construction.

WMB's earnings of $33 million were a 46% drop from third-quarter 2016, while WMZ's profits of $259 million were 20.5% lower, both largely due two unprofitable assets: the former olefins factory in Geismar, Louisiana, which WMB sold in July, and a former Canadian subsidiary, which WMB sold in September 2016. Hurricanes Harvey and Irma had an unfavorable impact of about $8 million.

WPZ began construction in September on its Atlantic Sunrise Pipeline project in Pennsylvania. Industrial Info is tracking nearly $900 million in active projects associated with Atlantic Sunrise, including two major segments--the $283 million Central Penn South line, which runs from Lancaster County to Columbia County, and the $200 million Central Penn North line, which runs from Columbia County to Susquehanna County--and two compressor stations: the $60 million Station 610 in Bloomsburg, Pennsylvania, and the $20 million Station 605 in Montrose, Pennsylvania.

The 183-mile pipeline, which is a 1.7 billion-cubic-foot-per-day expansion of the existing Transco Natural Gas Pipeline, will link the Mid-Atlantic and Southeastern U.S. markets with the booming Marcellus Shale. For more information, see September 19, 2017, article - Williams Begins Construction on Atlantic Sunrise Pipeline Project in Pennsylvania, and Industrial Info's project reports on Central Penn South, Central Penn North, Station 610 and Station 605.

Four of WMB and WMZ's Transco expansion projects began service during the quarter: Gulf Trace, Hillabee Phase I, and the Dalton and New York Bay expansions. New York Bay still has three projects under construction: a $65 million unit addition at compressor Station 207 in Parlin, New Jersey, a $10 million expansion of Station 303 in Roseland, New Jersey, and $2 million in modifications at Station 200 in Frazer, Pennsylvania. The New York Bay expansion is expected to provide up to 115 million standard cubic feet per day of natural gas from Middlesex County to Keyport, New Jersey. For more information, see Industrial Info's project reports on Station 207, Station 303 and Station 200.

The Transco expansion projects that have begun service so far this year reflect a 25% increase in the system's design capacity, according to Williams. Another expansion on Transco, the Virginia Southside II project, is expected to begin service during the fourth quarter. Major aspects of the project include a $45 million unit addition at Compressor Station 166 in Chatham, Virginia, $45 million unit addition at Compressor Station 185 in Manassas, Virginia, and $25 million pipeline lateral in Lawrenceville, Virginia. For more information, see Industrial Info's project reports on the Chatham and Manassas stations, and the Virginia lateral.

WPX Energy reported a $149 million net loss in the third quarter, compared with a $245 million loss in the same period last year. Its capital expenditures for the first nine months of the year almost doubled from last year, however, to $855 million from $440 million.

During the quarter, WPX closed a strategic partnership with Howard Energy Partners (Houston, Texas) to jointly develop oil-gathering and natural gas-processing infrastructure in the Delaware Basin, part of Texas' Permian Basin, according to a press release. WPX owns 50% of the joint venture. Separately, WPX signed an agreement to sell its legacy natural gas position in the San Juan Basin for $169 million, although WPX will retain is holdings in San Juan Basin's Gallup oil play.

Industrial Info is tracking $690 million of WPX projects in the Delaware Basin, including $180 million in drilling programs in Reeves County's Wolfcamp production field. Each of the six projects is valued at $30 million and involves drilling five 11,000-foot-deep vertical wells to produce crude oil. For more information, see Industrial Info's project reports on the Upper A field, Lower A field, B field, C field, D field and X/Y field.

WPX expects the Wolfcamp A formation to be the focus of the company's 2018 development program in the Delaware Basin. Wolfcamp A saw particularly strong results during the quarter, with three of the five laterals hitting 24-hour highs exceeding 4,000 barrels of oil-equivalent per day, according to WPX.

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