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Williams Partners Begins First Phase of Hillabee Expansion

Pipeline operator,  Williams Partners L.P. WPZ recently reported that the first phase of its Hillabee expansion project is underway. The project will enhance the capacity of the partnership’s Transco pipeline system in Alabama by 818,410 Dekatherms per day (Dth/d).

The development will use the new Sabal Trail pipeline to supply gas to Florida as demand for cleaner energy is increasing rapidly in the growing power generation market.

About the Project

In Feb 2016, the Federal Energy Regulatory Commission ("FERC") approved the Hillabee project. William Partners expects the development to add more than 1.1 million Dt/d of pipeline capacity to the Transco system by 2021.

Construction of the project will take place in three phases. While the first phase has already begun, the partnership has scheduled the second phase to be in service by the second quarter of 2020 and expects the third phase to take off in the second quarter of 2021. The first phase includes construction of a new compressor facility in Choctaw County, AL along with more than 20 miles of expansion loops. The second and third phases will add approximately 11 miles and 13 miles of expansion loops to the pipeline, respectively.

There is More

The Hillabee and Sabal Trail projects together have the potential to connect power generators of Florida with Transco’s Station 85 Pool. This will provide the power generators uninterrupted access to Haynesville and Midcontinent areas' natural gas supply basins. It will also benefit from the soon-to-be completed Atlantic Sunrise in northeastern Pennsylvania.

About Transco

The pipeline currently delivers natural gas via its 10,200 mile network. Transco's mainline extends approximately 1,800 miles between South Texas and the New York City. It provides cost efficient gas services in 12 Southeast and Atlantic Seaboard states.

About the Partnership

Tulsa, OK-based Williams Partners is a publicly traded master limited partnership with midstream infrastructure assets that are involved in transporting, gathering and processing natural gas and natural gas liquids. The partnership also has an ownership interest in pipeline systems that are spread across 33,000 miles – transporting natural gas from North American resource plays to markets with demand for clean power generation, heating, and industrial use.

We believe Williams Partners’ allocation of its capital budget toward the expansion of the Transco pipeline system will provide stable fee-based revenues in the coming quarters. We note that the partnership's first-quarter 2017 earnings of 68 cents per limited partner unit beat the Zacks Consensus Estimate of 35 cents and were far better than a loss of 25 cents per limited partner unit in the prior-year quarter. However, long-term debt of $17,065 million, which is weighing on the partnership’s balance sheet, could affect pipeline expansions.

Price Performance

Williams Partners belongs to the Zacks categorized Energy & Pipeline - Master Limited Partnership (MLP) industry. In the last six months, William Partners’ units have declined 0.6% against the industry’s increase of 0.5%.

Zacks Rank and Stocks to Consider

Williams Partners presently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the oil and energy sector are Delek US Holdings, Inc. DK, Crescent Point Energy Corporation CPG and Canadian Natural Resources Limited CNQ. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Delek US Holdings’ sales for 2017 are expected to increase 71.3% year over year. The company delivered an average positive earnings surprise of 60.7% in the last four quarters.

Crescent Point’s sales for the second quarter of 2017 are expected to increase 14% year over year. The partnership delivered an average positive earnings surprise of 354.9% in the last four quarters.

Canadian Natural Resources’ sales for 2017 are expected to increase 49.4% year over year. The company delivered a positive earnings surprise of 30.8% in the first quarter of 2017.

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Williams Partners LP (WPZ) : Free Stock Analysis Report
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