Williams Continues to Benefit From Strength in Gas Markets in Third Quarter

Williams’ third-quarter results were quite strong, as the firm guided toward the top end of its $6.1 billion to $6.4 billion EBITDA guidance range for 2022. After updating our model, we maintain our $32 fair value estimate and narrow moat rating. The strength is broad-based across all parts of Williams’ business, with adjusted EBITDA up 15% year over year to $1.6 billion. Material contributors to the growth include higher commodity-based rates, improved Haynesville volumes due in part to the Trace Midstream deal completed earlier this year, and the Leidy South project entering service. With more than 20 billion cubic feet per day (bcf/d) in U.S. LNG export projects under consideration and within the Transco service corridor, Williams has ample growth opportunities over the next few years. Notably, Williams’ debt portfolio is entirely fixed rate at 4.8% on average with a maturity profile of just over 12 years, protecting it somewhat from higher near-term interest costs.