The price of WTI crude has dropped from the low $60's to around $50 in just a couple of weeks. Investors are freaking out, and share prices of energy companies across the board have been hit. While the values of almost all energy stocks are falling, not all companies have business operations tied to the price of crude oil. This general sell-off in the sector offers investors who understand how the energy sector works an opportunity to pick up great companies and cheaper share prices.
One company in particular, is offering a tremendous opportunity right now with the recent sell-off. Having rejected a buyout offer over 10% higher than its current share price, you can expect any other bids to come in to be even higher than the previous one. On top of this, even if a buyout does not go through, this company has plans for double-digit distribution growth through a minimum of the next half decade.
Williams Companies (NYSE:WMB) is an energy infrastructure company that is almost entirely focused on natural gas services. Williams is in play as a takeover candidate, providing a win-win situation for investors who buy WMB now. The current decline in energy prices and energy sector stock prices will be temporary, and at some point prices will recover. This is the time for large, financially secure companies to buy assets on the cheap. Then in the next upturn, those assets will pay off with greater revenues and profits.
Williams Companies is the general partner of large-cap midstream MLP, Williams Partners LP (NYSE:WPZ). The two companies own assets that operate entirely in the natural gas side of the energy world. Pipelines, processing facilities, and other assets are owned by both companies. Williams management notes that 30% of all natural gas produced in the U.S. touches its system at some point. This graphic below illustrates the range of natural gas services provided by the two Williams companies.
Williams has over $9 billion of planned growth capital spending to continue to expand the natural gas network. About 90% of current revenues are fee-based, providing a stable revenue stream and predictable cash flow growth. WMB and WPZ are both managed to generate growing dividend streams for investors.
