Williams Companies, Inc. (WMB) Lower on Ratings Downgrade, Oil Prices

Shares of Tulsa, Oklahoma, based Williams Companies, Inc. (WMB) fell on Tuesday, against the backdrop of a higher day in stocks overall. Williams stock was down 11.50%, falling $2.15 per share, to close at $16.54 per share, on volume of 49,427,275 shares. Falling oil prices, as well as a ratings downgrade on the company - reducing the company's rating to junk status - weighed negatively on the stock.

Founded in 1908, the Williams Companies., Inc. is an integrated natural gas company that explores, produces, transports, sells and processes natural gas and petroleum products.
It includes the Williams Partners LP (WPZ) segment, which includes gas pipelines and domestic midstream businesses. The company's stock trades on the New York Stock Exchange.

Williams stock fell on Tuesday in response to a combination of a ratings downgrade, as well as falling oil prices. Fitch issued a downgrade of Williams, lowering the rating from BBB- to BB+. The lower rating officially dropped Williams rating to junk bond status. It also dropped the Williams Partners segment from BBB to BBB-, which is considered to be the last rung of investment grade ratings.

Fitch cited Williams Partners' significant exposure to Chesapeake Energy (CHK) as a major area of concern. Fitch lowered Chesapeake Energy's rating by two notches in December, and Williams Partners earns about 20% of it's revenues from the company.

The Fitch downgrade comes just a few days after Moody's downgraded Williams Companies senior unsecured debt from Baa3 to Ba1. Moody's also downgraded Williams Partners senior unsecured debt ratings from Baa2 to Baa3, and short term ratings from Prime-2 to Prime-3. It is keeping Williams on review for additional downgrades pending completion of its acquisition by Energy Transfer Equity, LP (see link below).

The other factor weighing on Williams stock on Tuesday was oil. West Texas Intermediate dropped below $30 per barrel in New York for the first time since 2003, on fears of lower demand as a result of economic slowing in China. The drop comes on the heals of a 30% decline in oil prices during 2015.

Williams shares are near their 52 week low. The stock traded as high as $61.38 during that time.

Other News WMB

Benzinga's Top Upgrades
Analysts at Jefferies upgraded Williams Companies, Inc. in December from Hold to Buy with a price target of $43.00.

The biggest pipeline deal of 2015 came between Energy Transfer Equity and Williams Companies at $55 billion, creating the fifth largest energy company in the world.

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Production project with PetroChina Co. begins after signing the deal eight years ago.
Published on Jan 13, 2016
By Kevin Mercadante

Copyrighted 2020. Content published with author's permission.

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