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Williams profits slide 46 percent; big writedown slashes earnings The petroleum services division, which includes the North Pole refinery and gas stations in Alaska, showed better results than a year ago Allen Baker PNA Contributing Writer
Williams Cos. took a $232 million charge against its first quarter earnings to write down money owed by its former communications subsidiary.
The charge came amid a flurry of activity by the Tulsa company to raise cash and improve its balance sheet as Williams Communications inched toward the Chapter 11 bankruptcy the company filed April 22.
For Williams Cos. itself, the final tally for the quarter was a profit of $107.7 million, down 46 percent from $199.2 million a year ago.
But even that didn’t show the full hit on common stock investors from the various financing deals made this year. A further charge of $69.7 million was listed as preferred stock dividends. That reflects a change in the value of $275 million worth of convertible preferred stock issued when the company sold its Kern River Pipeline. Trading higher The preferred, which pays 9 7/8 percent, can be turned into common stock at $18.75 a share. So with Williams trading significantly higher, the company had to slice two thirds off the earnings available to common shareholders, shrinking that figure to just $38 million, compared with the $199.2 million a year ago.
On top of that, Williams took a charge of $15.5 million for its loss on the sale of the Kern River line to a company affiliated with Warren Buffett.
Meanwhile, back in the regular business end of things, Williams was doing fairly well æ even in refining, where other companies showed marked weakness in the quarter.
The energy marketing and trading operation, a volatile business where Williams competed with Enron, took in $281.1 million compared with $484.5 billion a year ago. Higher prices and higher volatility in electric power and other energy sources in the 2001 quarter gave Williams more hedging room then.
Natural gas pipeline operations contributed $190.2 million in profits, 8 percent above the 2001 quarter’s $176.7 million. Natural gas up Exploration and production of natural gas brought in $105.7 million, up from $54.2 million a year ago, before Williams bought Canada’s Barrett Resources. Volume was up 202 percent compared with the prior quarter.
Midstream gas and liquids produced a profit of $69.4 million, up 84 percent from $37.8 million a year earlier.
The petroleum services division, which includes the Williams refinery in North Pole as well as the company’s stations in Alaska, showed better results than a year ago.
The segment earned $31.9 million, more than double the $14.7 million for the 2001 quarter. Last year’s quarter included a $11.2 million writedown, but even with that the company said refining operations remained “solidly profitable.”
Williams Energy Partners, another 2001 spinoff where Williams remains a general partner, showed a segment profit of $26.9 million, up from $22.8 million a year ago. A few weeks ago, Williams sold a major pipeline system to Williams Energy Partners to improve its balance sheet.
With the sales and lower energy prices, Williams had revenues of $2.18 billion for the quarter, down 29 percent from $3.06 billion a year ago. For all of 2001, revenue was $11.0 billion.
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