With energy prices surging, Williams Cos. (WMB), the fourth-largest U.S. pipeline operator, sits in a pretty position. It currently is an integrated natural gas conglomerate, with an exploration and production unit in addition to its pipeline and mid-stream assets.

But the company is going to break off 20 percent of its exploration and production (E&P) unit through an initial public offering this year, and the rest through a tax-free spinoff next year. That gives the E&P unit, which has more potential for growth, a chance to shine on its own.

Meanwhile, Williams placed its pipeline and midstream assets into a master limited partnership last year — Williams Partners. Williams Cos. has a 73 percent limited partner stake and a 2 percent general partner stake. Williams Partners’ plans for expansion and its valuable long-term contracts give it a good opportunity to increase distributions.

Williams reported profit of $321 million in the first quarter, reversing a loss of $193 million a year earlier. "We're off to a good start this year, and we're expecting an even stronger performance for the remainder of 2011 and 2012," Williams CEO Alan Armstrong said in a statement accompanying the earnings report.

The company increased its earnings forecast by 11 percent for each year to reflect strong profits in the natural gas liquids (NGL) and olefin portions of its midstream assets.

"We continue to invest in and bring more value-adding natural gas and NGL infrastructure projects online,” Armstrong said. “With abundant supplies in the new shale plays and growing demand from natural gas-fired electrical generation, the need for natural gas infrastructure will continue to grow.”

Rising price targets

Citigroup analysts have a buy rating on the stock and raised their target price last month to $38 from $32 previously, an 18 percent increase from recent trading action.

Zacks Investment Research analysts are bullish too. “We like the company’s strong business mix, attractive growth opportunities in its low-risk upstream model and relatively stable fee-based midstream services,” they write.