We are reiterating our Buy recommendation, earnings estimates and price objective for Williams Companies, Inc. (WMB) shares. The company remains well positioned to capitalize on attractive growth opportunities in its low-risk exploration and production (E&P) business, besides enjoying strong leverage to continued strength in natural gas liquids margins in its Midstream business.

We believe that Williams Rockies development drilling program focused on the Piceance Basin is the key to its upstream growth going forward. Additionally, the company raised its earnings outlook for the rest of 2008 and 2009, citing production growth. A recently completed $1 billion share repurchase program, a 10% dividend increase, and creation of a pipeline MLP are some of the other positives in the Williams story.

We believe that the company has moved beyond its restructuring phase and is now clearly ready to focus on growth opportunities. We expect double-digit volume gains in 2008, after production growth in excess of 20% in 2007. In January 2008, Williams created a new publicly traded pipeline MLP, expected to act as an important catalyst for the company’s future growth.

On August 18, Williams declared that the Federal Energy Regulatory Commission (FERC) had approved its proposal to expand its Transco natural gas pipeline to serve markets in the northeastern United States. The extension project is designed to increase Transco s firm transportation capacity by 142,000 dekatherms per day.

For 2008, Williams increased its profit guidance to $3.15 $3.65 billion and EPS guidance to $2.35 $2.80, up from $3.1 $3.65 billion and $2.30 $2.80, respectively. For 2009, the company guided towards earnings in the $2.925 $3.825 billion range and EPS in the range of $2.10 $2.95.

Read the full analyst report on WMB

“WMB” Free Stock Analysis: Buy? Sell? Hold?
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