Williams Partners Reports Year-End 2013 Financial Results

  • 2013 Net Income is $1.07 Billion, $1.45 per Common Unit; Results Impacted by Lower NGL Margins, Extended Outage at Olefins Plant
  • Distributable Cash Flow (DCF) From Partnership’s Operations Up 19% vs. Full-Year 2012; No Special IDR Waiver Required in 4Q
  • Fee-based Revenue Up $209 Million or 8% vs. 2012
  • Continue to Expect More Than 50% Growth in DCF for 2013 vs. 2015 Guidance Period
  • Geismar Startup Delayed Until June; Expect BI Insurance to Substantially Offset Financial Impact
  • Canadian Asset Dropdown Closing Expected End of February
  • Transco Contracts and Adds Large-Scale Atlantic Sunrise Project to Guidance
  • Partnership Reaffirms Guidance for LP per Unit Distribution Growth of Approximately 6% in each of 2014 and 2015

Business Wire

TULSA, Okla.--(BUSINESS WIRE)--

Williams Partners L.P. (WPZ):

Summary Financial Information   Full Year     4Q
Amounts in millions, except per-unit and coverage ratio amounts. All income amounts attributable to Williams Partners L.P. 2013     2012 2013     2012
(Unaudited)
 
Net income $ 1,067 $ 1,232   $ 211 $ 291  
Net income per common L.P. unit $ 1.45 $ 1.89   $ 0.12 $ 0.42  
                       
 
Distributable cash flow (DCF) (1) $ 1,771 $ 1,681 $ 509 $ 425
Less: Pre-partnership DCF (2)   -   (192 )   -   (20 )
DCF attributable to partnership operations $ 1,771 $ 1,489   $ 509 $ 405  
 
Cash distribution coverage ratio (1)(3) .90x

.95x

.92x .92x
 

(1) Distributable Cash Flow and Cash Distribution Coverage Ratio are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release.

(2) This amount represents DCF from the Gulf Olefins assets during 2012, since these periods were prior to the receipt of cash flows from the assets.
(3) Includes benefit of IDR waivers of $188 million and $49 million for 2013 and 2012, and $16 million and $25 million for 4Q 2013 and 4Q 2012.
 

Williams Partners L.P. (WPZ) announced unaudited 2013 net income of $1.07 billion, or $1.45 per common limited-partner unit, compared with 2012 net income of $1.23 billion, or $1.89 per common limited-partner unit.

The $165 million decrease in 2013 net income was primarily due to $297 million or 39 percent lower natural gas liquid (NGL) margins as well as lost production at the Geismar olefins plant in the third and fourth quarters. The decrease was partially offset by a $209 million, or 8 percent, increase in fee-based revenues and by $50 million of initial insurance recoveries related to the Geismar incident.

For fourth-quarter 2013, Williams Partners reported net income of $211 million, or $0.12 per common limited-partner unit, compared with $291 million, or $0.42 per common limited-partner unit, for fourth-quarter 2012.

The $80 million decrease in fourth-quarter net income was primarily due to $77 million in lost production at the Geismar olefins plant as well as $43 million or 28 percent lower NGL margins. In addition, certain settlement resolutions and higher operating costs related to our rapidly growing Northeast G&P segment reduced net income. The decrease was offset by a $58 million, or 8 percent, increase in fee-based revenues as well as the absence of allocated reorganization-related costs in 2012.

There is a more detailed analysis of the partnership’s businesses later in this news release. Prior-period results throughout this release have been recast to include the results of the Geismar olefins production facility acquired from Williams in November 2012 and to reflect the revised segment reporting resulting from the organizational restructuring effective Jan. 1, 2013.

Distributable Cash Flow & Distributions

For 2013, Williams Partners generated $1.77 billion in DCF attributable to partnership operations, compared with $1.49 billion in DCF attributable to partnership operations in 2012.

For the fourth quarter of 2013, Williams Partners generated $509 million in DCF attributable to partnership operations, compared with $405 million for the fourth quarter of 2012.

The $282 million increase in DCF for the year was driven by growth in fee-based revenues and lower maintenance capital spending primarily on lower required pipeline integrity projects and one time maintenance capital items in 2012 at our regulated entities. Expected business interruption insurance recoveries related to the Geismar olefin plant incident contributed $123 million to DCF in 2013, of which $50 million was received in the third quarter. These factors more than offset $297 million lower NGL margins.

Williams Partners recently announced that it increased its quarterly cash distribution to unitholders to $0.8925 per unit, a 7.9-percent increase over the prior year amount. It is also a 1.7-percent increase over the partnership's third-quarter 2013 distribution of $0.8775 per unit.

CEO Perspective

Alan Armstrong, chief executive officer of Williams Partners’ general partner, made the following comments:

“In the face of the past year’s challenges presented by the continued decline in NGL margins and the significant and tragic Geismar incident, we continued to focus on significantly growing our fee-based revenues. This growth was steady throughout 2013 and we expect it to grow even faster in 2014 and 2015 as we deliver on major projects for our customers in a safe and reliable manner. Our distributable cash flow was up 19 percent for 2013 and we expect DCF to grow from approximately $800 million to $1.2 billion through the 2015 guidance period. As well, we were able to grow our distributions by approximately 9 percent and are reaffirming guidance for annual distribution growth of 6 percent in each of 2014 and 2015.

“Late in 2013, the partnership placed into service a number of important projects and we expect to place into service approximately $4.5 billion in projects in 2014 and 2015. We continue growing our gathering and processing operations to meet producer needs in the Northeast while following through on a roster of Transco expansions to serve growing markets along the Eastern Seaboard. In the Gulf of Mexico, we’re on schedule to bring into service significant deepwater infrastructure that is well supported by anchor customers and positioned for further upside as the deepwater Gulf of Mexico accelerates.

“We continue to see tremendous appetite for additional firm transportation capacity from a range of industry participants, as evidenced by our fully-contracted Atlantic Sunrise project, and we’ve identified abundant opportunities to help connect the very best supply basins with the fastest growing markets by building out large-scale, market-integrated infrastructure,” Armstrong said.

Business Segment Performance

Beginning with its first-quarter 2013 results, Williams Partners’ operations are reported through four business segments. Prior-period results have been recast to reflect the partnership’s updated segment reporting structure.

  Full Year   4Q
             
Segment Profit (Loss)* Segment Profit + DD&A * Segment Profit (Loss)* Segment Profit + DD&A *
Amounts in millions 2013 2012 2013 2012   2013 2012 2013 2012
 
Northeast G&P ($24 ) ($37 ) $ 108 $ 39 ($26 ) ($17 ) $ 12 $ 14
Atlantic-Gulf 614 574 977 955 166 158 257 258
West 741 980 977 1,214 186 207 245 268
NGL & Petchem Services   275       295       302     318     16       93       21     100
Total $ 1,606 $ 1,812 $ 2,364 $ 2,526 $ 342 $ 441 $ 535 $ 640
 
Adjustments   121     37     121   37     143     8     143   8
 
Total $ 1,727   $ 1,849   $ 2,485 $ 2,563   $ 485   $ 449   $ 678 $ 648
 
* Schedules reconciling segment profit to adjusted segment profit and adjusted segment profit + DD&A are attached to this news release.
 
Williams Partners     2012       2013        
Key Operational Metrics

1Q

   

2Q

   

3Q

   

4Q

1Q

   

2Q

   

3Q

   

4Q

4Q Change
Year-over-year Sequential
Fee-based Revenues (millions) $ 651 $ 647 $ 659 $ 694 $ 684 $ 704 $ 720 $ 752 8% 4%
 
NGL Margins (millions) $ 242 $ 189 $ 167 $ 154 $ 121 $ 105 $ 118 $ 111 -28% -6%
Ethane Equity sales (million gallons) 176 166 163 141 23 37 52 12 -91% -77%
Per-Unit Ethane NGL Margins ($/gallon) $ 0.36 $ 0.22 $ 0.12 $ 0.04 $ 0.03 $ 0.02 ($0.01 ) $ 0.04 0% N/A
Non-Ethane Equity sales (million gallons) 132 129 138 138 123 128 128 109 -21% -15%
Per-Unit Non-Ethane NGL Margins ($/gallon) $ 1.36 $ 1.17 $ 1.07 $ 1.08 $ 0.97 $ 0.83 $ 0.92 $ 1.01 -6% 10%
 
Olefin Margins (millions) $ 74 $ 70 $ 77 $ 77 $ 118 $ 88 N/A N/A N/A N/A
Geismar ethylene sales volumes (millions of lbs.) 284 250 263 261 246 211 N/A N/A N/A N/A
Geismar ethylene margin ($/pound) $ 0.18 $ 0.20 $ 0.22 $ 0.23 $ 0.37 $ 0.33 N/A N/A N/A N/A
 

Northeast G&P

Northeast G&P includes the partnership’s midstream gathering and processing business in the Marcellus and Utica shale regions, including Susquehanna Supply Hub and Ohio Valley Midstream, as well as its 51-percent equity investment in Laurel Mountain Midstream, and its 47.5-percent equity investment in Caiman Energy II. Caiman Energy II owns a 50 percent interest in Blue Racer Midstream. This segment is in the early stages of developing large-scale energy infrastructure solutions for the Marcellus and Utica shale regions.

Northeast G&P reported segment loss of $24 million for 2013, compared with segment loss of $37 million for 2012. For fourth-quarter 2013, Northeast G&P reported segment loss of $26 million, compared with segment loss of $17 million for fourth-quarter 2012.

For the year, the improved results are primarily due to an increase in fee revenues driven by significantly higher volumes in the Susquehanna Supply Hub and Ohio Valley Midstream businesses and improved Laurel Mountain Midstream equity earnings. For both the year and the fourth quarter, results reflect higher operating costs including depreciation associated with this rapidly growing segment as well as certain settlement resolutions.

Atlantic-Gulf

Atlantic-Gulf includes the Transco interstate gas pipeline and a 41-percent interest in the Constitution interstate gas pipeline development project, which we consolidate. The segment also includes the partnership’s significant natural gas gathering and processing and crude production handling and transportation in the Gulf Coast region. These operations include a 51-percent interest in the Gulfstar project, a 50-percent interest in Gulfstream and a 60-percent interest in Discovery.

Atlantic-Gulf reported segment profit of $614 million for 2013, compared with $574 million for 2012. For fourth-quarter 2013, Atlantic-Gulf reported segment profit of $166 million, compared with segment profit of $158 million for fourth-quarter 2012.

Segment profit for the quarter and the year of 2013 increased primarily due to higher transportation fee revenues associated with expansion projects and new transportation rates effective in 2013 for Transco, as well as lower operating expenses, partially offset by lower NGL margins and reduced equity earnings from Discovery.

West

West includes the partnership’s gathering, processing and treating operations in Wyoming, the Piceance Basin and the Four Corners area, as well as the Northwest Pipeline interstate gas pipeline system.

West reported segment profit of $741 million for 2013, compared with $980 million for 2012. For fourth-quarter 2013, West reported segment profit of $186 million, compared with segment profit of $207 million for fourth-quarter 2012.

Lower segment profit for the year was due to 42 percent lower NGL margins, including the effects of periods of system-wide ethane rejection and lower per-unit margins. Lower segment profit for the fourth quarter was mostly due to lower volumes as a result reduced ethane recoveries and a customer contract that expired. Decreases for the year in gathering and processing fee revenues were due to severe winter weather causing production freeze-offs in the first quarter as well as declines in production in the Piceance basin and Four Corners areas. Increased natural gas transportation revenues associated with Northwest Pipeline’s new rates partially offset these declines.

NGL & Petchem Services

NGL & Petchem Services includes the partnership’s energy commodities marketing business, an NGL fractionator and storage facilities near Conway, Kan., a 50-percent interest in Overland Pass Pipeline, and an 83.3 percent interest in an olefins production facility in Geismar, La., along with a refinery grade propylene splitter and pipelines in the Gulf Coast region.

NGL & Petchem Services reported segment profit of $275 million for 2013, compared with $295 million for 2012. For fourth-quarter 2013, NGL & Petchem reported segment profit of $16 million, compared with segment profit of $93 million for fourth-quarter 2012.

Segment profit for the year declined $20 million primarily due to $92 million lower olefin margins resulting from the extended outage of the Geismar plant partially offset by $50 million of insurance recoveries related to the Geismar incident and improved marketing margins. Fourth quarter results were significantly impacted by the extended outage of the Geismar plant.

Recent Operational Achievements for Business Segments

Williams Partners

Northeast G&P

  • Steadily increased the Northeast gathered volumes in 2013 reaching a new monthly average record of 2 billion cubic feet per day in the Utica-Marcellus. Average daily gathered volumes increased 63 percent in fourth quarter 2013 versus fourth quarter 2012. The Susquehanna Supply Hub grew volumes by 70 percent, Ohio Valley Midstream grew volumes by 40 percent and Laurel Mountain grew volumes by 55 percent during the year.
  • On track to expand fractionation capacity and install de-ethanizer and stabilizer in the first half of 2014 at Ohio Valley Midstream to keep pace with producer demand.

Atlantic-Gulf

  • Timely expansions to the Transco pipeline system drove record-breaking volume deliveries in areas stretching from Mississippi to New York City. Transco set a three-day delivery record Jan. 6-8, 2014 when it delivered an average of 11.12 million dekatherms per day.
  • Successfully contracted Atlantic Sunrise, a major new Transco expansion that would provide firm transportation service from various supply points along Transco’s Leidy Line in Pennsylvania to demand centers in the southeast United States. A portion of the project will be jointly owned by Williams Partners and a third party. Williams Partners’ estimated $2.1 billion investment in the project is subject to final Board approval. Williams Partners expects to bring Atlantic Sunrise into service in the second half of 2017, assuming all regulatory approvals are received in a timely manner. Additional details are expected to be disclosed later this week.
  • Placed into service on November 1 the remaining capacity of its Northeast Supply Link, after bringing half the capacity into service three months ahead of schedule in response to customer demands. The $390 million project expands Transco's existing system into the New York market by 250,000 dekatherms per day.
  • Received FERC approval and began preliminary construction work on the $300 million Virginia Southside Expansion, which is designed to provide 270,000 dekatherms per day of incremental, year-round firm natural gas transportation capacity to North Carolina and a new, gas-fired, power-generation plant in Virginia in the second half of 2015.
  • In the Gulf of Mexico, installation of the 215-mile Keathley Canyon Connector 20-inch deepwater pipeline is more than 80 percent complete. The $460 million project, which includes a new shelf platform and an onshore methanol extraction plant, is due to be completed and ready to receive production within the fourth quarter of 2014.
  • In the deepwater Gulf of Mexico, positioned the floating spar and prepared for installation of the platform of Gulfstar One, the first-of-its-kind floating production spar on schedule to start serving our deepwater customers in the third quarter of 2014. The turn-key product, which is part of Williams’ new offshore field development program, combines production handling services with export pipeline, oil and gas gathering and processing services.
  • Received FERC’s draft environmental impact statement in February 2014 regarding the Constitution Pipeline project.

West

  • Placed into service Northwest Pipeline’s South Seattle Lateral expansion on November 1. The $20 million project provides Puget Sound Energy with an additional 64,000 dekatherms per day of delivery capacity.
  • The Willow Creek processing plant in the Piceance Basin achieved a new quarterly average daily inlet volume throughput record of 467 million cubic feet per day in the fourth quarter.

NGL & Petchem Services

  • Continuing to rebuild, turnaround and expand the Geismar Olefins plant, which is now expected to be completed and restarted in June 2014. The expansion will increase the ethylene production capacity by 600 million pounds per year to a total capacity of 1.95 billion pounds per year.
  • Completed a truck rack expansion project at the NGL fractionator and storage facilities near Conway, Kan. The additional loading bay is helping meet increased demand for propane this heating season.

Guidance

Williams Partners’ profitability and cash flow guidance ranges are unchanged from guidance issued on October 30, 2013.

Williams Partners is reaffirming its guidance for cash distribution per limited partner unit growth of 6 percent in each of 2014 and 2015. Williams Partners continues to expect DCF for the 2013 versus 2015 guidance period to increase within a range of $800 million to $1.2 billion. Several key drivers and assumptions are embedded in this estimate. The largest risks to achieving this growth in 2014 are:

a. Natural gas and natural gas liquids prices that drive assumed NGL margins and drilling activities, as well as olefins prices and margins.

b. Recovery of business interruption insurance proceeds offsetting the majority of the Geismar plant outage in 2014, which assumes a June startup.

c. The timely project completion and producer startup of the Gulfstar One project and Discovery’s Keathley Canyon System.

d. The delivery of new facilities in the Marcellus producing region along with expected volume growth.

e. The in-service date for Transco’s Rockaway Lateral.

Williams Partners’ Geismar plant is expected to be out of service until June 2014. The expected delay in returning the plant to service resulted from a variety of factors including the extended loss of utilities (primarily steam and electrical systems) severely damaged in the incident; lower than expected productivity due to congestion and complexity from temporary utility equipment impacting both the rebuild and expansion efforts; and restrictions in work-area access due to extensive clean-up procedures. Concurrently, the company is implementing additional systems and processes while conducting the necessary training to support the safe start-up and continued reliable operation of the facility.

Williams Partners has $500 million of combined business interruption and property damage insurance related to this event (subject to deductibles and other limitations) that is expected to significantly mitigate the financial loss. Based on current commodity pricing assumptions and property damage estimates, the partnership currently estimates approximately $430 million of cash recoveries from insurers related to business interruption losses and approximately $70 million related to property damage. The partnership’s current estimate of uninsured business interruption loss, property damage loss and other losses totals $83 million, of which $73 million occurred in 2013 and $10 million is expected in 2014. A $50 million payment from insurers was received during the 3rd quarter of 2013. In February, the insurers agreed to pay a second installment of $125 million with funds expected to be received in the first quarter.

The assumed expanded plant restart date and repair cost estimate are subject to various uncertainties and risks that could cause the actual results to be materially different from these assumptions. The assumed property damage and business interruption insurance proceeds are also subject to various uncertainties and risks that could cause the actual results to be materially different from these assumptions.

Capital expenditures included in guidance for 2014 and 2015 have been increased by approximately $880 million. The increase includes approximately $550 million related to new projects. This includes approximately $400 million in the Atlantic-Gulf segment for the initial spending on three new projects: Atlantic Sunrise, Dalton Expansion and Gunflint. In the NGL & Petchem Services segment, capital expenditure increases include approximately $150 million in new projects related to the Canadian assets to be acquired as well as a $175 million increase in the estimated cost of the Geismar projects. Capital expenditures guidance changes also include timing shifts between years and other various adjustments.

The Canadian asset dropdown is expected to close at the end of February 2014. The expected dropdown requires approval by the Williams Partners Conflicts Committee and its Board of Directors as well as the Williams Board of Directors.

The partnership’s guidance for its earnings, distributable cash flow and capital expenditures are displayed in the following table:

   
Williams Partners Guidance   2014   2015
Amounts are in millions except coverage ratio. Low   Mid   High   Low   Mid   High
DCF attributable to partnership ops. (1) (3) $ 2,220   $ 2,350   $ 2,480 $ 2,605   $ 2,785   $ 2,965
 
Total Cash Distribution (2) $ 2,351 $ 2,419 $ 2,487 $ 2,632 $ 2,714 $ 2,796
 
Cash Distribution Coverage Ratio (1)(3) .94x .97x 1.0x .99x 1.03x 1.06x
 
Adjusted Segment Profit (1)(3): $ 2,165 $ 2,345 $ 2,525 $ 2,610 $ 2,830 $ 3,050
 
Adjusted Segment Profit + DD&A (1)(3): $ 3,060 $ 3,265 $ 3,470 $ 3,620 $ 3,865 $ 4,110
 
Capital Expenditures (3):
Maintenance $ 305 $ 340 $ 375 $ 295 $ 325 $ 355
Growth   3,025     3,275     3,525     1,675     1,850     2,025
Total Capital Expenditures   $ 3,330   $ 3,615   $ 3,900   $ 1,970   $ 2,175   $ 2,380

(1) Distributable Cash Flow, Cash Distribution Coverage Ratio, Adjusted Segment Profit and Adjusted Segment Profit + DD&A are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release.

(2) The cash distributions in guidance are on an accrual basis and reflect an approximate annual growth rate in limited partner distributions of 6% for each of 2014 and 2015.
(3) Guidance assumes the planned dropdown to Williams Partners of Williams' currently in-service Canadian assets is completed as expected by the end of February 2014. The planned dropdown is subject to successful negotiation of a transaction between Williams and Williams Partners. Guidance assumes Williams Partners acquires the Canadian assets by issuing Williams a class of units that do not pay cash distributions during the guidance period. However, capital expenditure guidance does not include the planned acquisition of Williams' Canadian assets as the acquisition price will be determined by the negotiation between Williams and Williams Partners.
 

Year-End Materials to be Posted Shortly, Q&A Webcast Scheduled for Tomorrow

Williams Partners’ year-end 2013 financial results will be posted shortly at www.williamslp.com. The information will include the data book and analyst package.

Williams and Williams Partners L.P. will host a joint Q&A live webcast on Thursday, Feb. 20, at 9:30 a.m. EST. A limited number of phone lines will be available at (888) 329-8905. International callers should dial (719) 325-2301. A link to the live year-end webcast, as well as replays of the webcast in both streaming and downloadable podcast formats, will be available for two weeks following the event at www.williams.com and www.williamslp.com.

Form 10-K

The partnership plans to file its 2013 Form 10-K with the Securities and Exchange Commission next week. Once filed, the document will be available on both the SEC and Williams Partners websites.

Definitions of Non-GAAP Financial Measures

This press release includes certain financial measures – distributable cash flow, cash distribution coverage ratio, adjusted segment profit and adjusted segment profit + DD&A – that are non-GAAP financial measures as defined under the rules of the SEC.

For Williams Partners L.P., adjusted segment profit excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Adjusted segment profit + DD&A is further adjusted to add back depreciation and amortization expense. Management believes these measures provide investors meaningful insight into Williams Partners L.P.'s results from ongoing operations.

For Williams Partners L.P. we define distributable cash flow as net income plus depreciation and amortization and cash distributions from our equity investments less our earnings from our equity investments, income attributable to noncontrolling interests and maintenance capital expenditures. We also adjust for payments and/or reimbursements under omnibus agreements with Williams and certain other items.

For Williams Partners L.P. we also calculate the ratio of distributable cash flow to the total cash distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We have also provided this ratio calculated using the most directly comparable GAAP measure, net income.

This press release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the partnership's assets and the cash that the business is generating. Neither adjusted segment profit, adjusted segment profit + DD&A nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

About Williams Partners L.P. (WPZ)

Williams Partners L.P. is a leading diversified master limited partnership focused on natural gas transportation; gathering, treating, and processing; storage; natural gas liquid (NGL) fractionation; and oil transportation. The partnership owns interests in three major interstate natural gas pipelines that, combined, deliver 14 percent of the natural gas consumed in the United States. The partnership’s gathering and processing assets include large-scale operations in the U.S. Rocky Mountains and both onshore and offshore along the Gulf of Mexico. Williams (WMB) owns approximately 64 percent of Williams Partners, including the general-partner interest. More information is available at www.williamslp.com, where the partnership routinely posts important information.

Our reports, filings, and other public announcements may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We make these forward-looking statements in reliance on the safe harbor protections provided under the private Securities Litigation Reform Act of 1995.

You typically can identify forward-looking statements by various forms of words such as "anticipates," "believes," "seeks," "could," "may," "should," "continues," "estimates," "expects," "forecasts," "intends," "might," "goals," "objectives," "targets," "planned," "potential," "projects," "scheduled," "will," "assumes," "guidance," "outlook," "in service date," or other similar expressions. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management and include, among others, statements regarding:

• Amounts and nature of future capital expenditures;

• Expansion and growth of our business and operations;

• Financial condition and liquidity;

• Business strategy;

• Cash flow from operations or results of operations;

• The levels of cash distributions to unitholders;

• Natural gas, natural gas liquids, and olefins prices, supply and demand;

• Demand for our services.

Forward-looking statements are based on numerous assumptions, uncertainties and risks that could cause future events or results to be materially different from those stated or implied in this announcement. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:

• Whether we have sufficient cash from operations to enable us to pay current and expected levels of cash distributions, if any, following establishment of cash reserves and payment of fees and expenses, including payments to our general partner;

• Availability of supplies, market demand and volatility of prices;

• Inflation, interest rates and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on our customers and suppliers);

• The strength and financial resources of our competitors and the effects of competition;

• Whether we are able to successfully identify, evaluate and execute investment opportunities;

• Ability to acquire new businesses and assets and successfully integrate those operations and assets into our existing businesses, as well as successfully expand our facilities;

• Development of alternative energy sources;

• The impact of operational and development hazards and unforeseen interruptions;

• Costs of, changes in, or the results of laws, government regulations (including safety and environmental regulations), environmental liabilities, litigation and rate proceedings;

• Our allocated costs for defined benefit pension plans and other postretirement benefit plans sponsored by our affiliates;

• Changes in maintenance and construction costs;

• Changes in the current geopolitical situation;

• Our exposure to the credit risks of our customers and counterparties;

• Risks related financing, including restrictions stemming from our debt agreements, future changes in our credit ratings and the availability and cost of capital;

• The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate;

• Risks associated with weather and natural phenomena, including climate conditions;

• Acts of terrorism, including cybersecurity threats and related disruptions;

• Additional risks described in our filings with the Securities and Exchange Commission (SEC).

Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or to announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.

In addition to causing our actual results to differ, the factors listed above may cause our intentions to change from those statements of intention set forth in this announcement. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise.

Limited partner interests are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business.

Investors are urged to closely consider the disclosures and risk factors in our annual report on Form 10-K filed with the SEC on February 27, 2013, and each of our quarterly reports on Form 10-Q available from our offices or from our website at www.williamslp.com.

Reconciliation of Non-GAAP Measures
(UNAUDITED)

This press release includes certain financial measures, adjusted segment profit, adjusted segment profit + DD&A, distributable cash flow, and cash distribution coverage ratio that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission.

For Williams Partners L.P., adjusted segment profit excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Adjusted segment profit + DD&A is further adjusted to add back depreciation and amortization expense. Management believes these measures provide investors meaningful insight into Williams Partners L.P.’s results from ongoing operations.

For Williams Partners L.P., we define distributable cash flow as net income plus depreciation and amortization and cash distributions from our equity investments less our earnings from equity investments, income attributable to noncontrolling interests and maintenance capital expenditures. We also adjust for payments and/or reimbursements under omnibus agreements with Williams and certain other adjustments. Total distributable cash flow is reduced by any amounts associated with operations which occurred prior to our ownership of the underlying assets to arrive at distributable cash flow attributable to partnership operations.

For Williams Partners L.P., we also calculate the ratio of distributable cash flow attributable to partnership operations to the total cash distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We have also provided this ratio calculated using the most directly comparable GAAP measure, net income.

This press release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the Partnership’s assets and the cash that the business is generating. Neither adjusted segment profit, adjusted segment profit + DD&A, nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

                       
2012   2013  
(Dollars in millions, except coverage ratios) 1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year   1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year
                                             
Williams Partners L.P.
Reconciliation of Non-GAAP “Distributable cash flow” to GAAP “Net income”
 
Net income $ 408 $ 243 $ 290 $ 291 $ 1,232 $ 321 $ 257 $ 280 $ 212 $ 1,070
Income attributable to noncontrolling interests (3 ) (3 )
Depreciation and amortization 159 171 185 199 714 190 185 190 193 758
Non-cash amortization of debt issuance costs included in interest expense 4 3 4 3 14 3 4 4 3 14
Equity earnings from investments (30 ) (27 ) (30 ) (24 ) (111 ) (18 ) (35 ) (31 ) (20 ) (104 )
Gain on sale of assets (6 ) (6 )
Acquisition and transition-related costs 19 4 3 26
Allocated reorganization-related costs 8 6 11 25 2 2
Impairment of certain assets 6 6
Loss related to Geismar Incident 6 4 4 14
Geismar Incident adjustment for insurance timing - business interruption (35 ) 108 73
Geismar Incident adjustment for insurance timing - repair expense 10 10
Contingency (gain) loss 9 16 25
Net reimbursements from Williams under omnibus agreements 6 1 4 5 16 4 4 2 3 13
Maintenance capital expenditures (62 )   (113 )   (129 )   (103 )   (407 ) (43 )   (75 )   (79 )   (58 )   (255 )
 
Distributable cash flow excluding equity investments 485 299 340 385 1,509 459 346 344 468 1,617
Plus: Equity investments cash distributions to Williams Partners L.P. 52     46     34     40     172   38     41     34     41     154  
 
Distributable cash flow 537 345 374 425 1,681 497 387 378 509 1,771
Less: Pre-partnership Distributable cash flow 62     52     58     20     192                    
 
Distributable cash flow attributable to partnership operations $ 475     $ 293     $ 316     $ 405     $ 1,489   $ 497     $ 387     $ 378     $ 509     $ 1,771  
 
 
Total cash distributed $ 362 $ 373 $ 394 $ 442 $ 1,571 $ 473 $ 489 $ 442 $ 556 $ 1,960
 
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash distributed 1.31     0.79     0.80     0.92     0.95   1.05     0.79     0.86     0.92     0.90  
 
Net income divided by Total cash distributed 1.13     0.65     0.74     0.66     0.78   0.68     0.53     0.63     0.38     0.55  
 
   
Reconciliation of GAAP “Segment Profit” to Non-GAAP “Adjusted Segment Profit” and “Adjusted Segment Profit + DD&A”
(UNAUDITED)                  
   
2012 2013
(Dollars in millions)   1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year 1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year
                                               
Segment profit (loss):
Northeast G&P $ 4 $ (20 ) $ (4 ) $ (17 ) $ (37 ) $ (9 ) $ 12 $ (1 ) $ (26 ) $ (24 )
Atlantic-Gulf 165 127 124 158 574 159 152 137 166 614
West 311 239 223 207 980 186 162 207 186 741
NGL & Petchem Services 71   45     86   93   295   120     77     62     16     275  
Total segment profit $ 551     $ 391     $ 429     $ 441     $ 1,812   $ 456     $ 403     $ 405     $ 342     $ 1,606  
 
Adjustments:

Northeast G&P

Acquisition and transition-related costs $ $ 19 $ 4 $ 2 $ 25 $ $ $ $ $
Share of impairments at equity method investee

5

5 7 7
Contingency loss                           9     16     25  
Total Northeast G&P adjustments 19 4 7 30 9 23 32

Atlantic-Gulf

Litigation settlement gain (6 ) (6 )
Gain on sale of certain assets (6 ) (6 )
Net loss (recovery) related to Eminence storage facility leak 1 1 2 (5 ) 5 (2 ) (2 )
Impairment of certain assets         6       6                    
Total Atlantic-Gulf adjustments 1 (6 ) 7 2 (6 ) (5 ) 5 (2 ) (8 )

NGL & Petchem Services

Loss related to Geismar furnace fire 4 1 5
Loss related to Geismar Incident 6 4 4 14
Geismar Incident adjustment for insurance timing - business interruption (35 ) 108 73
Geismar Incident adjustment for insurance timing - repair expense                               10     10  
Total NGL & Petchem Services adjustments 4 1 5 6 (31 ) 122 97
                                   
Total adjustments included in segment profit $ 1     $ 13     $ 15     $ 8     $ 37   $ (6 )     $ 1     $ (17 )     $ 143     $ 121  
 
Adjusted segment profit (loss):
Northeast G&P $ 4 $ (1 ) $ $ (10 ) $ (7 ) $ (9 ) $ 12 $ 8 $ (3 ) $ 8
Atlantic-Gulf 166 121 131 158 576 153 147 142 164 606
West 311 239 223 207 980 186 162 207 186 741
NGL & Petchem Services 71   45     90   94   300   120     83     31     138     372  
Total adjusted segment profit $ 552     $ 404     $ 444     $ 449     $ 1,849   $ 450     $ 404     $ 388     $ 485     $ 1,727  
 
Depreciation and amortization (DD&A):
Northeast G&P $ 5 $ 17 $ 23 $ 31 $ 76 $ 29 $ 32 $ 33 $ 38 $ 132
Atlantic-Gulf 92 92 97 100 381 93 87 92 91 363
West 58 57 58 61 234 61 58 58 59 236
NGL & Petchem Services 4   5     7   7   23   7     8     7     5     27  
Total depreciation and amortization $ 159     $ 171     $ 185     $ 199     $ 714   $ 190     $ 185     $ 190     $ 193     $ 758  
 
Adjusted segment profit (loss) + DD&A:
Northeast G&P $ 9 $ 16 $ 23 $ 21 $ 69 $ 20 $ 44 $ 41 $ 35 $ 140
Atlantic-Gulf 258 213 228 258 957 246 234 234 255 969
West 369 296 281 268 1,214 247 220 265 245 977
NGL & Petchem Services 75   50     97   101   323   127     91     38     143     399  
Total adjusted segment profit + DD&A $ 711     $ 575     $ 629     $ 648     $ 2,563   $ 640     $ 589     $ 578     $ 678     $ 2,485  
 
     
Williams Partners L.P.
    2014 Guidance 2015 Guidance
(Dollars in millions, except coverage ratios)     Midpoint Midpoint
                 
Reconciliation of Non-GAAP “Distributable Cash Flow” to GAAP “Net income”
 
Net income $ 1,906 $ 2,085
Depreciation and amortization 920 1,035
Maintenance capital expenditures (340 ) (325 )
Attributable to noncontrolling interests (45 ) (105 )
Geismar Incident adjustments (127 )
Other / Rounding 36   95  
 
Distributable cash flow $ 2,350   $ 2,785  
 
Total cash to be distributed $ 2,419 $ 2,714
 
Coverage ratios:
 
Distributable cash flow divided by Total cash to be distributed 0.97   1.03  
 
Net income divided by Total cash to be distributed 0.79   0.77  
 
 
 
Reconciliation of Non-GAAP “Adjusted Segment Profit” and “Adjusted Segment Profit + DD&A” to GAAP “Segment Profit”
 
Segment profit:
Northeast G&P $ 195 $ 355
Atlantic-Gulf 630 965
West 620 595
NGL & Petchem Services 1,027   915  
Total segment profit $ 2,472   $ 2,830  
Adjustments:
Northeast G&P $ $
Atlantic-Gulf
West
NGL & Petchem Services - Geismar Incident adjustment for insurance timing - business interruption (104 )
NGL & Petchem Services - Geismar Incident adjustment for insurance timing - repair expense 22
NGL & Petchem Services - Geismar involuntary conversion gain (45 )  
Total adjustments (127 ) $  
Adjusted segment profit:
Northeast G&P $ 195 $ 355
Atlantic-Gulf 630 965
West 620 595
NGL & Petchem Services 900   915  
Total Adjusted segment profit $ 2,345   $ 2,830  
Depreciation and amortization (DD&A):
Northeast G&P $ 170 $ 210
Atlantic-Gulf 430 495
West 235 235
NGL & Petchem Services 85   95  
Total depreciation and amortization $ 920   $ 1,035  
Adjusted segment profit + DD&A:
Northeast G&P $ 365 $ 565
Atlantic-Gulf 1,060 1,460
West 855 830
NGL & Petchem Services 985   1,010  
Total adjusted segment profit + DD&A $ 3,265   $ 3,865  

Contact:
Williams Partners L.P.
Media Contact:
Tom Droege, 918-573-4034
or
Investor Contacts:
John Porter, 918-573-0797
or
Sharna Reingold, 918-573-2078

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