Williams Cuts Payout, Looks to Finalize Canada Assets Sale

  • Pipeline giant reduces quarterly distribution by 69 percent
  • Company is ‘fully aligned, energized and focused’: Armstrong

Williams Cos. became the latest pipeline company to cut its quarterly dividend in the face of low energy prices and questions about its strategy as a standalone company.

Williams reduced its payout to 20 cents from 64 cents, the Tulsa, Oklahoma-based company said in its second-quarter earnings statement on Monday. That represents the first reduction in at least a decade, according to data compiled by Bloomberg. Its master-limited partnership, Williams Partners LP, maintained its distribution of 85 cents.

Williams plans to reinvest about $1.7 billion into Williams Partners through 2017 with the cash saved from the lower dividends, it said. The company may raise the dividend in 2018. Williams also expects to finalize the sale of its Canadian operations during the third quarter for more than $1 billion, the company said.

Williams is pivoting to the future after its failed merger -- barring a court appeal -- with Energy Transfer Equity LP. Since late June, it’s been mulling the size and composition of its board following the resignation of six directors. In slashing its payout, it joins the ranks of pipeline operators including Kinder Morgan Inc. and Plains All American Pipeline LP that have cut distributions to weather a downturn in the oil and natural gas markets and protect their credit ratings.

“Our organization is fully aligned, energized and focused on simplifying the way we operate and make decisions,” Chief Executive Officer Alan Armstrong said in the statement. “We are committed to executing on our projects, lowering our overall risk, and driving stockholder value by delivering on our growth strategy and strengthening our balance sheet.”

Shares surged as much as 7.6 percent to $24.25 as of 4:57 p.m. in after-hours trading in New York.

Williams’ adjusted earnings were 19 cents a share, missing the 20-cent average of seven analysts’ estimates compiled by Bloomberg.

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