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Williams Crash: Blow To Longhorn Pipeline?
Williams Crash: Blow To Longhorn Pipeline?
by Stefan Wray
Iconmedia
July 25, 2002
While a federal judge couldn't stop Longhorn, maybe the economy will.
This week a key partner in the Longhorn Partners Pipeline, Williams Companies Inc., saw its stock value drop dramatically by between 75 and 80 percent, leaving the stock price hovering at just over $1 per share.
The dive follows Williams' second quarter report released on July 22 that said the company's board of directors "approved a reduction of the third-quarter common stock dividend to one cent per share from 20 cents to conserve cash."
According to a July 24 Reuters report, Moody's Investors Service on Wednesday cut Williams Cos.' "credit ratings four notches to junk status on concern the energy trader won't generate enough cash to pay its debts."
Williams is a dominant partner in Longhorn Partners Pipeline. Williams owns 31.5% of the partnership and is responsible for the operation of the Longhorn Pipeline.
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Williams Pipeline Company 31.5%
Beacon Investment Group 31.5%
Exxon Mobil Corp. 20.0%
British Petroleum 15.0%
Chisholm 2.0%
100.0%
Source: Exxon Mobil VP of Investor Relations
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According to a July 24 Associated Press report, Moody's downgrade of
Williams debt to "junk" status on Wednesday was the third such rating this
week. On Monday Fitch rated it as "junk." Standard and Poor's did the same
on Tuesday.
The same AP report stated that Williams reported this week the company has "$450 million cash and about $700 million in available credit. It owes $800 million in debt payments this month and next."
A brief glance at William's web site (http://www.williams.com) shows the company is now trying to sell its Western Canada assets so it can concentrate on resources on its "core midstream positions in Wyoming, Colorado, New Mexico and the deepwater Gulf of Mexico."
What does this all mean for the Longhorn Pipeline?
According to a homeowner adjacent to the Longhorn Pipeline in Hays County this bad news for Williams could be good news for pipeline opponents.
In an email message sent Wednesday evening she wrote: "I was just told by our contact with Longhorn that the pipeline is dead for now and maybe for good. Williams went broke and nobody can bail them out."
This news comes less than a week after a Federal judge in Austin, Sam Sparks, ruled in favor of Longhorn and did not rule that an Environmental Impact Statement was necessary before allowing gas to flow through the pipe.
At a hearing in federal court earlier in the month, Longhorn attorneys argued that the partnership was financially secure and would be able to cover costs if held liable in a multi-million dollar accident or spill.
But with Williams on the brink as it seems to be, will the other partners bail out Longhorn? Can they cover the cost of operating the pipeline? Can they be held financially responsible for pipeline leaks or explosions? Or is the company now vaporware?
This all begs the question as to who exactly are the other important partners. According to the Longhorn Partners Pipeline web site one of the partners is called Beacon Energy Fund.
But a June 10 letter from Exxon Mobilπs Vice President of Investor Relations, Patrick T. Mulva, reveals a different name. He calls it Beacon Investment Group and that it, like Williams, owns 31.5% of Longhorn.
The problem is that Internet searches on either the names "Beacon Energy Fund" and "Beacon Investment Group" return unsatisfactory answers.
So 63% of the ownership of Longhorn is by a company going under and a nebulous company whose true identity is not so apparent.
Seems like someone better talk to Texas' Land Commissioner David Dewhurst and inform him of these important details before he grants the final easements for the Longhorn Pipeline.
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Iconmedia is producing a video documentary about the Longhorn Pipeline. For more information see, http://www.iconmedia.org/longhornvideo/index.html
Stefan Wray can be reached at swray@io.com
by Stefan Wray
Iconmedia
July 25, 2002
While a federal judge couldn't stop Longhorn, maybe the economy will.
This week a key partner in the Longhorn Partners Pipeline, Williams Companies Inc., saw its stock value drop dramatically by between 75 and 80 percent, leaving the stock price hovering at just over $1 per share.
The dive follows Williams' second quarter report released on July 22 that said the company's board of directors "approved a reduction of the third-quarter common stock dividend to one cent per share from 20 cents to conserve cash."
According to a July 24 Reuters report, Moody's Investors Service on Wednesday cut Williams Cos.' "credit ratings four notches to junk status on concern the energy trader won't generate enough cash to pay its debts."
Williams is a dominant partner in Longhorn Partners Pipeline. Williams owns 31.5% of the partnership and is responsible for the operation of the Longhorn Pipeline.
Williams Pipeline Company 31.5%
Beacon Investment Group 31.5%
Exxon Mobil Corp. 20.0%
British Petroleum 15.0%
Chisholm 2.0%
100.0%
Source: Exxon Mobil VP of Investor Relations
----------------------------------------------
The same AP report stated that Williams reported this week the company has "$450 million cash and about $700 million in available credit. It owes $800 million in debt payments this month and next."
A brief glance at William's web site (http://www.williams.com) shows the company is now trying to sell its Western Canada assets so it can concentrate on resources on its "core midstream positions in Wyoming, Colorado, New Mexico and the deepwater Gulf of Mexico."
What does this all mean for the Longhorn Pipeline?
According to a homeowner adjacent to the Longhorn Pipeline in Hays County this bad news for Williams could be good news for pipeline opponents.
In an email message sent Wednesday evening she wrote: "I was just told by our contact with Longhorn that the pipeline is dead for now and maybe for good. Williams went broke and nobody can bail them out."
This news comes less than a week after a Federal judge in Austin, Sam Sparks, ruled in favor of Longhorn and did not rule that an Environmental Impact Statement was necessary before allowing gas to flow through the pipe.
At a hearing in federal court earlier in the month, Longhorn attorneys argued that the partnership was financially secure and would be able to cover costs if held liable in a multi-million dollar accident or spill.
But with Williams on the brink as it seems to be, will the other partners bail out Longhorn? Can they cover the cost of operating the pipeline? Can they be held financially responsible for pipeline leaks or explosions? Or is the company now vaporware?
This all begs the question as to who exactly are the other important partners. According to the Longhorn Partners Pipeline web site one of the partners is called Beacon Energy Fund.
But a June 10 letter from Exxon Mobilπs Vice President of Investor Relations, Patrick T. Mulva, reveals a different name. He calls it Beacon Investment Group and that it, like Williams, owns 31.5% of Longhorn.
The problem is that Internet searches on either the names "Beacon Energy Fund" and "Beacon Investment Group" return unsatisfactory answers.
So 63% of the ownership of Longhorn is by a company going under and a nebulous company whose true identity is not so apparent.
Seems like someone better talk to Texas' Land Commissioner David Dewhurst and inform him of these important details before he grants the final easements for the Longhorn Pipeline.
Iconmedia is producing a video documentary about the Longhorn Pipeline. For more information see, http://www.iconmedia.org/longhornvideo/index.html
Stefan Wray can be reached at swray@io.com
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