-- Net Income, DCF Performance Continue to Improve -- Strong 3Q
Results: DCF Up 97% Over 2Q -- 3Q Distribution Coverage Ratio is
1.80x TULSA, Okla., Oct. 29 /PRNewswire-FirstCall/ -- Williams
Partners L.P. (NYSE:WPZ) today announced unaudited third-quarter
2009 net income of $55.9 million, compared with third-quarter 2008
net income of $60.8 million. Net income per limited-partner unit
for third-quarter 2009 was $1.04, compared with $1.00 per
limited-partner unit, as revised, for third-quarter 2008. Lower
natural gas liquid (NGL) margins, driven by much lower NGL prices,
were the primary reason for the decline in net income in the third
quarter. The lower prices were significantly offset by sharply
lower natural gas prices. Gathering volumes at Wamsutter and Four
Corners remained steady. Lower operating and maintenance expenses
at Four Corners and higher volumes at Discovery partially offset
the lower NGL margins. Year-to-date through Sept. 30, Williams
Partners' net income was $100.0 million, compared with $176.3
million for the same period in 2008. Net income per limited-partner
unit for the first nine months of 2009 was $1.88, compared with
$2.92, as revised, for the first nine months of 2008. Lower NGL
margins, due to much lower NGL prices, were also the primary reason
for the decline in net income in the year-to-date period. These
lower prices were significantly offset by the benefit of sharply
lower natural gas prices. Lower operating and maintenance expenses
at Four Corners also helped partially offset the lower NGL margins.
Third-quarter and year-to-date 2008 net income per limited-partner
unit have been revised pursuant to the adoption of an accounting
rule change in 2009, which changed the method the partnership
previously used to allocate undistributed earnings between the
limited partners and the general partner. Distributable Cash Flow
Significantly Improved Versus 2Q '09 For third-quarter 2009, the
key measure of distributable cash flow per weighted-average limited
partner unit was $1.15, compared with $0.96 for third-quarter 2008.
Distributable cash flow for limited-partner unitholders was $60.5
million for third-quarter 2009, compared with $50.5 million for
third-quarter 2008. Distributable cash flow per weighted-average
limited partner unit was $2.29 for the first nine months of 2009,
compared with $2.65 for the first nine months of 2008.
Distributable cash flow for limited-partner unitholders was $120.6
million for the first nine months of 2009, compared with $139.3
million for the same period in 2008. The 2009 amounts were
significantly, favorably impacted by Williams' (NYSE:WMB) waiver of
its incentive distribution rights for 2009. The waiver, which was
detailed in the partnership's April 15, 2009, press release,
decreases the amount of distributable cash flow allocated to the
general partner. Although distributable cash flow is down compared
to 2008 for the year-to-date period, it has significantly improved
throughout 2009, and is up 97 percent over second-quarter 2009. The
partnership's cash distribution coverage ratio was 1.80x for
third-quarter 2009, which included the benefit of Williams' IDR
waiver. Without that benefit, the partnership's cash distribution
coverage ratio would have been 1.48x for third-quarter 2009. The
year-over-year declines in distributable cash flow in the 2009
periods are due to lower cash distributions from the Discovery and
Wamsutter investments, as well as lower results from Four Corners.
Lower NGL margins drove the decline in results at Four Corners and
Wamsutter. As a result of 2008 hurricane impacts and sharply lower
NGL margins, Discovery did not make cash distributions to the
partnership earlier in the year. However, Discovery was fully
operational for third-quarter 2009 and paid the partnership an
$11.1 million cash distribution in September. Partnership
Strengthens Outlook for 2009 DCF, Distribution Coverage Williams
Partners' management is updating its outlook for full-year 2009
commodity price assumptions and the corresponding effect on select
partnership results to reflect year-to-date results and the outlook
for the fourth quarter. The partnership's outlook for 2009
distributable cash flow and cash distribution coverage ratio have
both been increased compared with previous guidance, which was
issued on Aug. 6. The full commodity price outlook and guidance are
presented in the following chart. 2009 Commodity Price Results,
Assumptions and Outlook
----------------------------------------------------- YTD 3Q
Full-Year 2009 Results Results Assumptions/Outlook ------- -------
------------------- Low High --- ---- Natural Gas ($/MMBtu): NYMEX
$3.93 $3.39 $3.95 $4.35 Rockies $2.79 $2.71 $3.00 $3.40 San Juan
$3.02 $2.95 $3.20 $3.50 Oil / NGL: Low High --- ---- Crude Oil -
WTI ($/barrel) $53 $68 $55 $60 NGL to Crude Oil relationship* 51%
47% 49% 51% Financial Impacts ----------------- Amounts in
millions, except NGL margins and coverage ratios Four Corners NGL
Margins ($/gallon) $0.39 $0.46 $0.40 $0.44 Wamsutter NGL Margins
($/gallon) $0.36 $0.43 $0.36 $0.39 2009 Distributable Cash Flow**
$123 $62 $170 $190 2009 Distributions $103 $34 $137 $137 Cash
Distribution Coverage 1.2x 1.8x 1.2x 1.4x Ratio** * This is
calculated as the price of natural gas liquids as a percentage of
the price of crude oil on an equal volume basis. ** 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. Management is also
providing its initial outlook for 2010 distributable cash flow and
cash distribution coverage, as well as NGL margins at Four Corners
and Wamsutter, based on current forward market commodity prices for
2010. This information is presented in the following chart. The
cash distribution coverage ratio range shown below is based on
current annual cash distribution per limited-partner unit of $2.54
and includes full payment of incentive distribution rights to
Williams in 2010. 2010 Base Business Outlook
-------------------------- Market (10-19-09) ---------- Natural Gas
($/MMBtu): NYMEX $6.31 Rockies $5.74 San Juan $5.83 Oil / NGL:
Crude Oil - WTI ($/barrel) $82.52 Crude to Gas Ratio 13:1 NGL to
Crude Oil relationship* 50% - 55% Financial Impacts
----------------- Four Corners NGL margin ($/gallon) $0.48 - $0.59
Wamsutter NGL margin ($/gallon) $0.43 - $0.52 Distributable Cash
Flow (in millions) ** $175 - $210 Cash Distribution Coverage
Ratio** 1.1x - 1.3x * This is calculated as the price of natural
gas liquids as a percentage of the price of crude oil on an equal
volume basis. ** 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. Chief Operating Officer Perspective "The partnership
turned in a very strong performance in the third quarter, as NGL
margins have continued to improve and gathering and equity sales
volumes were strong across all of our gathering and processing
businesses," said Alan Armstrong, chief operating officer of the
general partner of Williams Partners. "Our well connect program in
the West helped drive a 7 percent increase in gathered volumes at
Wamsutter during the quarter; and the new Tahiti volumes, as well
as full recovery from the '08 hurricane effects, led to a 51
percent increase in plant inlet volumes at Discovery," Armstrong
said. "Our strong performance in the second half of the year will
also enable us to pursue some small organic growth opportunities
and small bolt-on acquisitions," Armstrong said. Business Segment
Performance Business segment performance includes results for the
partnership's three business segments: Gathering and Processing -
West, which includes Four Corners and the Wamsutter investment;
Gathering and Processing - Gulf, which includes the Discovery
investment; and NGL Services, which includes the Conway
fractionation and storage complex. Consolidated Segment Profit 3Q
YTD ---- ----- Amounts in thousands 2009 2008 2009 2008 Gathering
and Processing - West $63,482 $70,691 $142,642 $207,874 Gathering
and Processing - Gulf 10,925 8,480 15,591 30,437 NGL Services 5,796
6,315 15,286 15,270 ----- ----- ------ ------ Consolidated Segment
Profit $80,203 $85,486 $173,519 $253,581 ======= ======= ========
======== Recurring Consolidated Segment Profit* Amounts in
thousands Gathering and Processing - West $58,482 $64,681 $138,608
$195,533 Gathering and Processing - Gulf 10,925 9,370 15,591 31,327
NGL Services 5,796 6,315 15,286 15,270 ----- ----- ------ ------
Recurring Consolidated Segment Profit* $75,203 $80,366 $169,485
$242,130 ======= ======= ======== ======== * A schedule reconciling
segment profit to recurring segment profit is attached to this
press release. Lower per-unit NGL margins at Four Corners drove the
lower results for the Gathering & Processing - West segment
during the third quarter. Lower operating and maintenance expenses
at Four Corners, as well as higher equity earnings from Wamsutter
partially offset the lower NGL margins. The lower operating and
maintenance expenses at Four Corners were primarily due to lower
system losses. The higher third-quarter equity earnings from
Wamsutter were due to a higher allocation of Wamsutter's net income
to the partnership in 2009 compared with 2008. Based on the
provisions of Wamsutter's LLC agreement, Williams Partners' share
of Wamsutter's net income varies depending on its year-to-date net
income for a given period and the partnership's overall level of
ownership. This higher allocation offset the decrease in
Wamsutter's total net income. Higher third-quarter equity earnings
from the Discovery investment drove the higher segment profit in
the Gathering and Processing -- Gulf segment for the third-quarter
of 2009. Discovery's third-quarter 2008 equity earnings were
reduced by approximately $5.0 million as a result of
hurricane-related damages and downtime. Lower per-unit NGL margins
at Four Corners and lower equity earnings from Wamsutter were the
key drivers of the lower year-to-date results in the Gathering and
Processing - West segment. Lower per-unit NGL margins led to the
lower equity earnings at Wamsutter. Downtime at Ignacio due to the
June 2009 pipeline rupture also negatively affected the
year-to-date results. Lower operating and maintenance expenses at
Four Corners, as well as higher fee-based revenues at Wamsutter on
higher gathering volumes partially offset the lower NGL margins.
The lower operating and maintenance expenses at Four Corners were
primarily due to lower system losses. Lower equity earnings from
the Discovery investment drove the lower segment profit results in
the Gathering and Processing - Gulf segment for the year-to-date
2009 period. The reduced equity earnings were due primarily to
lower per-unit NGL margins and lower plant inlet volumes as both
Discovery and its producers worked to recover from the 2008
hurricane damage. These negative impacts were partially offset in
the year-to-date period by the receipt of $4.2 million in business
interruption insurance proceeds on the Discovery investment during
the first quarter. Reconciliations of the partnership's
distributable cash flow for limited-partner unitholders to net
income, cash distribution coverage ratio, as well as recurring
segment profit to reported segment profit, are available on
Williams Partners' web site at http://www.williamslp.com/ and as an
attachment to this document. Definitions of Non-GAAP Financial
Measures Williams Partners defines recurring segment profit as
segment profit excluding items of income or loss that the
partnership characterizes as unrepresentative of its ongoing
operations. Williams Partners defines distributable cash flow
attributable to partnership operations as net income (loss) plus
depreciation, amortization and accretion, less earnings from equity
investments, as well as adjustments for certain non-cash,
non-recurring items, plus reimbursements from Williams under an
omnibus agreement and less maintenance capital expenditures, plus
the actual cash distributed by Wamsutter and Discovery.
Distributable cash flow per weighted average limited-partner unit
is a key measure of the partnership's financial performance and
available cash flows to unitholders. Williams Partners defines
distributable cash flow per limited-partner unit as distributable
cash flow attributable to partnership operations allocable to
limited partners divided by the weighted average limited
partner-units outstanding. Distributable cash flow attributable to
partnership operations allocable to limited partners is calculated
by allocating the distributable cash flow attributable to
partnership operations, as defined in the preceding paragraph,
between the general partner and the limited partners in accordance
with the cash-distribution provisions of our partnership agreement.
Williams Partners calculates the ratio of distributable cash flow
per limited partner unit to the actual cash distribution per unit
paid and the ratio of distributable cash flow attributable to
partnership operations to the total cash distributed (cash
distribution coverage ratio). These two measures reflect the amount
of distributable cash flow relative to the partnership's actual
cash distribution on both a per limited partner unit and total
distribution basis. Today's Analyst Call Williams Partners'
management will discuss the partnership's third-quarter 2009
financial results during a live webcast today beginning at 11 a.m.
EDT. Participants are encouraged to access the webcast and slides
for viewing, downloading and printing at
http://www.williamslp.com/. A limited number of phone lines also
will be available at (888) 208-1812. International callers should
dial (719) 325-2327. Replays of the third-quarter webcast, in both
streaming and downloadable podcast formats, will be available for
two weeks at http://www.williamslp.com/ following the event. Form
10-Q The partnership plans to file its Form 10-Q with the
Securities and Exchange Commission today. The document will be
available on both the SEC and Williams Partners web sites. About
Williams Partners L.P. (NYSE:WPZ) Williams Partners L.P. is a
publicly traded master limited partnership that owns natural gas
gathering, transportation, processing and treating assets serving
regions where producers require large scale and highly reliable
services, including the Gulf of Mexico, the San Juan Basin in New
Mexico and Colorado, and the Washakie Basin in Wyoming. The
partnership also serves the natural gas liquids (NGL) market
through its NGL fractionating and storage assets. The general
partner is Williams Partners GP LLC. More information about the
partnership is available at www.williamslp.com. Go to
http://www.b2i.us/irpass.asp?BzID=1296&to=ea&s=0 to join
our e-mail list. Contact: Jeff Pounds Williams (media relations)
(918) 573-3332 Sharna Reingold Williams (investor relations) (918)
573-2078 Williams Partners L.P. is a limited partnership formed by
The Williams Companies, Inc. (Williams). 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 the Private Securities Litigation Reform Act of 1995.
You typically can identify forward-looking statements by the use of
forward-looking words, such as "anticipates," believes," "could,"
"may," "should," "continues," "estimates," "expects," "forecasts,"
"intends," "might," "objectives," "planned," "potential,"
"projects," "scheduled," "will," and other similar expressions.
These statements are based on our present intentions and our
assumptions about future events and are subject to risks,
uncertainties, and other factors. In addition to any assumptions,
risks, uncertainties or other factors referred to specifically in
connection with such statements, other factors not specifically
referenced could cause our actual results to differ materially from
the results expressed or implied in any forward-looking statements.
Those factors include, among others: -- whether we have sufficient
cash from operations to enable us to maintain current levels of
cash distributions or to pay the minimum quarterly distribution
following establishment of cash reserves and payment of fees and
expenses, including payments to our general partner; --
availability of supplies (including the uncertainties inherent in
assessing and estimating future natural gas reserves), market
demand, volatility of prices, and the availability and cost of
capital; -- inflation, interest rates and general economic
conditions (including the current economic slowdown and the
disruption of global credit markets and the impact of these events
on our customers and suppliers); -- the strength and financial
resources of our competitors; -- development of alternative energy
sources; -- the impact of operational and development hazards; --
costs of, changes in, or the results of laws, government
regulations (including proposed climate change legislation),
environmental liabilities, litigation, and rate proceedings; --
changes in maintenance and construction costs; -- changes in the
current geopolitical situation; -- our exposure to the credit risks
of our customers; -- risks related to strategy and financing,
including restrictions stemming from our debt agreements, future
changes in our credit ratings, and the availability and cost of
credit; -- risks associated with future weather conditions; -- acts
of terrorism; and -- additional risks described in our filings with
the Securities and Exchange Commission. 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. In addition to causing our actual results to differ,
the factors listed above may cause our intentions to change. Such
changes in our intentions may also cause our results to differ. We
disclaim any obligation to and do not intend to publicly update or
revise any forward-looking statements or changes to our intentions,
whether as a result of new information, future events 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 Forms 10-K filed with the Securities and Exchange
Commission on February 26, 2009, and 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, Recurring
Segment Profit, Distributable Cash Flow and Distributable Cash Flow
per Limited Partner Unit that are non-GAAP financial measures as
defined under the rules of the Securities and Exchange Commission.
For Williams Partners L.P., Recurring Segment Profit excludes items
of income or loss that we characterize as unrepresentative of our
ongoing operations. Management believes Recurring Segment Profit
provides investors meaningful insight into Williams Partners L.P.'s
results from ongoing operations. For Williams Partners L.P. we
define Distributable Cash Flow attributable to partnership
operations as net income (loss) plus depreciation, amortization and
accretion, less our earnings from equity investments, as well as
adjustments for certain non-cash, non-recurring items, plus
reimbursements from Williams under an omnibus agreement and less
maintenance capital expenditures, plus the actual cash distributed
by Wamsutter and Discovery. For our equity investments, Wamsutter
and Discovery, we define Distributable Cash Flow as net income
(loss) plus depreciation, amortization and accretion and less
maintenance capital expenditures. We also adjust for certain
non-cash, non-recurring items. Our equity share of Wamsutter's
Distributable Cash Flow is based on the distribution provisions of
the Wamsutter LLC Agreement. Our equity share of Discovery's
Distributable Cash Flow is 60%. For Williams Partners L.P. we
define Distributable Cash Flow per Limited Partner Unit as
Distributable Cash Flow attributable to partnership operations
allocable to limited partners divided by the weighted average
limited partner units outstanding. Distributable Cash Flow
attributable to partnership operations allocable to limited
partners is calculated by allocating the distributable cash flow
attributable to partnership operations, as defined in the preceding
paragraph, between the general partner and the limited partners in
accordance with the cash distribution provisions of our partnership
agreement. For Williams Partners L.P. we also calculate the ratio
of Distributable Cash Flow per Limited Partner Unit to the actual
cash distribution per unit paid and the ratio of Distributable Cash
Flow attributable to partnership operations to the total cash
distributed (cash distribution coverage ratio). These measures
reflect the amount of Distributable Cash Flow relative to our cash
distribution on both a per Limited Partner Unit and total
distribution basis. We have also provided these ratios calculated
using the most directly comparable GAAP measures, net income per
unit and 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
Recurring Segment Profit nor Distributable Cash Flow are intended
to represent cash flows for the period, nor are they presented as
an alternative to net income (loss) or cash flow from operations.
Distributable Cash Flow per Limited Partner is not presented as an
alternative to net income per unit. 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. 2008 ---- (Thousands, except per- unit
amounts) 1st Qtr 2nd Qtr 3rd Qtr Y-T-D 4th Qtr Full Year
-------------- ------- ------- ------- ----- ------- ---------
Williams Partners L.P. Reconciliation of Non-GAAP "Recurring
Segment Profit" to GAAP "Segment Profit" Gathering and Processing -
West $50,405 $86,778 $70,691 $207,874 $46,288 $254,162 Gathering
and Processing - Gulf 13,511 8,446 8,480 30,437 (14,590) 15,847 NGL
Services 5,541 3,414 6,315 15,270 8,768 24,038 ----- ----- -----
------ ----- ------ Segment Profit 69,457 98,638 85,486 253,581
40,466 294,047 Non-recurring Items: Gathering and Processing - West
Involuntary conversion gain resulting from Ignacio fire - (3,266)
(6,010) (9,276) (2,328) (11,604) Wamsutter customer contract
adjustment included in equity earnings (3,065) - - (3,065) -
(3,065) Gathering and Processing - Gulf Discovery hurricane repair
expenses up to insurance deductible (60%) - - 890 890 2,935 3,825
Hurricane- related survey costs (60%) - - - - 1,188 1,188 NGL
Services Product imbalance valuation adjustment - - - - (1,437)
(1,437) Other items: Gathering and Processing - Gulf Impairment of
Carbonate Trend gathering pipeline - - - - 6,187 6,187 -------
------- ------ -------- ----- ----- Recurring Segment Profit
$66,392 $95,372 $80,366 $242,130 $47,011 $289,141 ======= =======
======= ======== ======= ======== 2009 ---- (Thousands, except per-
unit amounts) 1st Qtr 2nd Qtr 3rd Qtr Y-T-D -------------- -------
------- ------- ----- Williams Partners L.P. Reconciliation of
Non-GAAP "Recurring Segment Profit" to GAAP "Segment Profit"
Gathering and Processing - West $38,310 $40,850 $63,482 $142,642
Gathering and Processing - Gulf 691 3,975 10,925 15,591 NGL
Services 4,316 5,174 5,796 15,286 ----- ----- ----- ------ Segment
Profit 43,317 49,999 80,203 173,519 Non-recurring Items: Gathering
and Processing - West Involuntary conversion gain resulting from
Ignacio fire 966 - (5,000) (4,034) Wamsutter customer contract
adjustment included in equity earnings - - - - Gathering and
Processing - Gulf Discovery hurricane repair expenses up to
insurance deductible (60%) - - - - Hurricane- related survey costs
(60%) - - - - NGL Services Product imbalance valuation adjustment -
- - - Other items: Gathering and Processing - Gulf Impairment of
Carbonate Trend gathering pipeline - - - - ------- ------- -------
-------- Recurring Segment Profit $44,283 $49,999 $75,203 $169,485
======= ======= ======= ======== 2008 ---- (Thousands, except per-
unit amounts) 1st 2nd 3rd 4th Full Qtr Qtr Qtr Y-T-D Qtr Year
------ ------- ------- ------- ----- ------- ---- Williams Partners
L.P. Reconciliation of Non-GAAP "Distributable Cash Flow per
Limited Partner Unit" to GAAP "Net income" Net income $43,629
$71,822 $60,833 $176,284 $15,105 $191,389 Depreciation, amort-
ization and accretion 11,226 11,002 11,735 33,963 11,066 45,029
Non-cash amortization of debt issuance costs included in interest
expense 489 459 459 1,407 461 1,868 Involuntary conversion gain
resulting from Ignacio fire - (3,266) (6,010) (9,276) (2,328)
(11,604) Equity earnings (34,815) (46,050) (29,045) (109,910) 731
(109,179) Reimburse- ments from Williams under omnibus agreement
771 865 692 2,328 653 2,981 Impairment of Carbonate Trend gathering
pipeline - - - - 6,187 6,187 Maintenance capital expendi- tures(a)
(8,534) (2,497) (5,309) (16,340) (5,420) (21,760) ----- ----- -----
------ ----- ------ Distributable Cash Flow Excluding Equity
Invest- ments 12,766 32,335 33,355 78,456 26,455 104,911 ------
------ ------ ------ ------ ------- Plus: Wamsutter cash
distributions to Williams Partners L.P. 22,704 26,603 28,989 78,296
20,843 99,139 Plus: Discovery's cash distributions to Williams
Partners L.P. (b) 16,800 15,600 13,200 45,600 10,800 56,400 ------
------ ------ ------ ------ ------ Distributable cash flow
attributable to partner- ship operations 52,270 74,538 75,544
202,352 58,098 260,450 Distributable Cash Flow attributable to
partnership operations allocable to general partner 13,431 24,565
25,067 63,063 16,344 79,407 ------ ------ ------ ------ ------
------ Distributable Cash Flow attributable to limited partnership
operations allocable to limited partners $38,839 $49,973 $50,477
$139,289 $41,754 $181,043 ======= ======= ======= ======== =======
======== Weighted average number of units out- stand- ing:
52,774,728 52,774,728 52,775,912 52,775,126 52,777,452 52,775,710
========== ========== ========== ========== ========== ==========
Distributable Cash Flow attributable to partnership operations per
limited partner unit: $0.74 $0.95 $0.96 $2.65 $0.79 $3.44 =====
===== ===== ===== ===== ===== Actual cash distribution per unit:
$0.600 $0.625 $0.635 $1.860 $0.635 $2.495 Total cash distrib- uted:
$37,922 $40,560 $41,617 $120,099 $41,617 $161,716 Coverage ratios:
Distributable Cash Flow attributable to partnership operations per
limited partner unit divided by Actual cash distribution per unit:
1.23 1.52 1.51 1.42 1.25 1.38 ==== ==== ==== ==== ==== ====
Distributable cash flow attributable to partnership operations
divided by Total cash distributed 1.38 1.84 1.82 1.68 1.40 1.61
==== ==== ==== ==== ==== ==== Distributable cash flow attributable
to partnership operations divided by total cash distribution
excluding Williams' IDR Support (c) N/A N/A N/A N/A N/A N/A =======
======= ======= ======= ======= ======= Net income, per common and
subordinated unit divided by Actual cash distribution per unit 1.18
1.94 1.57 1.57 0.24 1.23 ==== ==== ==== ==== ==== ==== Net income
divided by Total cash distributed 1.15 1.77 1.46 1.47 0.36 1.18
==== ==== ==== ==== ==== ==== (a) Maintenance capital expenditures
includes certain well connection capital. (b) Discovery's LLC
agreement was amended in the second quarter 2009 so that it would
make its cash distribution for a given quarter in that same
quarter. (c) Williams' IDR support is a reduction of total cash
distributed of approximately $7.4 million. Wamsutter Reconciliation
of Non-GAAP "Distributable Cash Flow" to GAAP "Net income" Net
income $21,194 $37,480 $32,007 $90,681 $13,083 $103,764
Depreciation and accretion 5,228 5,213 5,295 15,736 5,446 21,182
Maintenance capital expendi- tures (3,245) (6,258) (5,867) (15,370)
(6,070) (21,440) ----- ----- ----- ------ ----- ------
Distributable Cash Flow - 100% $23,177 $36,435 $31,435 $91,047
$12,459 $103,506 ======= ======= ======= ======= ======= ========
Discovery Producer Services Reconciliation of Non-GAAP
"Distributable Cash Flow" to GAAP "Net income" Net income (loss)
$22,701 $14,282 $13,740 $50,723 ($16,323) $34,400 Depreciation and
accretion 6,983 6,802 3,726 17,511 3,813 21,324 Maintenance capital
expendi- tures (187) (285) (680) (1,152) (19) (1,171) --- --- ---
----- --- ----- Distributable Cash Flow - 100% $29,497 $20,799
$16,786 $67,082 ($12,529) $54,553 ======= ======= ======= =======
======== ======= Distributable Cash Flow - our 60% interest $17,698
$12,479 $10,072 $40,249 ($7,517) $32,732 ======= ======= =======
======= ======= ======= 2009 ---- (Thousands, except per-unit
amounts) 1st Qtr 2nd Qtr 3rd Qtr Y-T-D ------------------ -------
------- ------- ----- Williams Partners L.P. Reconciliation of
Non-GAAP "Distributable Cash Flow per Limited Partner Unit" to GAAP
"Net income" Net income $18,672 $25,368 $55,947 $99,987
Depreciation, amortization and accretion 11,184 11,164 11,288
33,636 Non-cash amortization of debt issuance costs included in
interest expense 460 462 461 1,383 Involuntary conversion gain
resulting from Ignacio fire 966 - (5,000) (4,034) Equity earnings
(12,110) (22,962) (34,700) (69,772) Reimbursements from Williams
under omnibus agreement 327 914 760 2,001 Impairment of Carbonate
Trend gathering pipeline - - - - Maintenance capital expenditures
(a) (5,142) (7,176) (3,780) (16,098) ------ ------ ------ -------
Distributable Cash Flow Excluding Equity Investments 14,357 7,770
24,976 47,103 ------ ----- ------ ------ Plus: Wamsutter cash
distributions to Williams Partners L.P. 15,643 20,045 25,634 61,322
Plus: Discovery's cash distributions to Williams Partners L.P. (b)
- 3,540 11,100 14,640 ------ ----- ------ ------ Distributable cash
flow attributable to partnership operations 30,000 31,355 61,710
123,065 Distributable Cash Flow attributable to partnership
operations allocable to general partner 600 627 1,234 2,461 --- ---
----- ----- Distributable Cash Flow attributable to limited
partnership operations allocable to limited partners $29,400
$30,728 $60,476 $120,604 ======= ======= ======= ======== Weighted
average number of units outstanding: 52,777,452 52,777,452
52,777,452 52,777,452 ========== ========== ========== ==========
Distributable Cash Flow attributable to partnership operations per
limited partner unit: $0.56 $0.58 $1.15 $2.29 ===== ===== =====
===== Actual cash distribution per unit: $0.635 $0.635 $0.635
$1.905 Total cash distributed: $34,197 $34,197 $34,197 $102,591
Coverage ratios: Distributable Cash Flow attributable to
partnership operations per limited partner unit divided by Actual
cash distribution per unit: 0.88 0.92 1.80 1.20 ==== ==== ==== ====
Distributable cash flow attributable to partnership operations
divided by Total cash distributed 0.88 0.92 1.80 1.20 ==== ====
==== ==== Distributable cash flow attributable to partnership
operations divided by total cash distribution excluding Williams'
IDR Support (c) 0.72 0.75 1.48 0.99 ==== ==== ==== ==== Net income,
per common and subordinated unit divided by Actual cash
distribution per unit 0.57 0.76 1.64 0.99 ==== ==== ==== ==== Net
income divided by Total cash distributed 0.55 0.74 1.64 0.97 ====
==== ==== ==== (a) Maintenance capital expenditures includes
certain well connection capital. (b) Discovery's LLC agreement was
amended in the second quarter 2009 so that it would make its cash
distribution for a given quarter in that same quarter. (c)
Williams' IDR support is a reduction of total cash distributed of
approximately $7.4 million. Wamsutter Reconciliation of Non-GAAP
"Distributable Cash Flow" to GAAP "Net income" Net income $15,321
$18,975 $23,642 $57,938 Depreciation and accretion 5,447 5,556
5,684 16,687 Maintenance capital expenditures (5,437) (6,080)
(2,787) (14,304) ------ ------ ------ ------- Distributable Cash
Flow - 100% $15,331 $18,451 $26,539 $60,321 ======= ======= =======
======= Discovery Producer Services Reconciliation of Non-GAAP
"Distributable Cash Flow" to GAAP "Net income" Net income (loss)
($5,352) $6,646 $18,430 $19,724 Depreciation and accretion 3,929
4,765 5,005 13,699 Maintenance capital expenditures (70) (1,037)
(518) (1,625) --- ------ ---- ------ Distributable Cash Flow - 100%
($1,493) $10,374 $22,917 $31,798 ======= ======= ======= =======
Distributable Cash Flow - our 60% interest ($896) $6,224 $13,750
$19,079 ===== ====== ======= ======= Williams Partners L.P.
Reconciliation of Non-GAAP "Distributable Cash Flow attributable to
partnership operations" and coverage ratio outlook for 2009 and
2010 (Dollars in millions) Full Year 2009 Full Year 2010
-------------- -------------- Total Year Total Year Total Year
Total Year Low High Low High --- ---- --- ---- Net income $130 $151
$144 $178 Depreciation, amortization and accretion 45 45 46 46
Certain non-cash, non-recurring items (3) (2) (7) (5)
Reimbursements from Williams under omnibus agreement 4 4 1 1 Equity
earnings (94) (99) (107) (123) Maintenance capital expenditures
(21) (21) (32) (32) --- --- --- --- Distributable cash flow
excluding equity investments $61 $78 $45 $65 --- --- --- --- Plus:
Wamsutter cash distributions to Williams Partners L.P. 86 87 99 107
Plus: Discovery's cash distributions to Williams Partners L.P. 23
25 31 38 -- -- -- -- Distributable cash flow attributable to
partnership operations $170 $190 $175 $210 ==== ==== ==== ====
Total cash to be distributed $137 $137 $166 $166 Coverage Ratios:
Distributable cash flow attributable to partnership operations
divided by total cash distributed 1.2 1.4 1.1 1.3 === === === ===
Net income divided by total cash distributed 1.0 1.1 0.9 1.1 ===
=== === === Consolidated Statements of Income (UNAUDITED) 2008*
---- (Thousands, except per-unit amounts) ---------------- 1st Qtr
2nd Qtr 3rd Qtr Y-T-D 4th Qtr Full Year ------- ------- -------
----- ------- --------- --------- Revenues: --------- Product
sales: Affiliate $78,122 $94,134 $92,421 $264,677 $49,622 $314,299
Third- party 4,221 9,741 6,430 20,392 4,589 24,981 Gathering and
processing: Affiliate 8,790 9,847 9,480 28,117 9,776 37,893 Third-
party 46,210 49,548 50,721 146,479 48,577 195,056 Storage 7,333
7,102 8,264 22,699 8,730 31,429 Fractiona- tion 3,292 4,804 5,484
13,580 3,861 17,441 Other 2,394 3,069 2,913 8,376 7,585 15,961
----- ----- ----- ----- ----- ------ Total revenues 150,362 178,245
175,713 504,320 132,740 637,060 Cost and expenses: Product cost and
shrink replacement: Affiliate 22,033 27,686 22,358 72,077 13,295
85,372 Third- party 30,065 38,323 35,391 103,779 16,927 120,706
Operating and maintenance expense: Affiliate 23,133 16,548 21,220
60,901 15,834 76,735 Third- party 23,951 29,984 29,257 83,192
25,974 109,166 Depreciation, amortization and accretion 11,226
11,002 11,735 33,963 11,066 45,029 General and administrative
expense: Affiliate 9,876 12,385 10,620 32,881 11,184 44,065 Third-
party 928 749 664 2,341 653 2,994 Taxes other than income 2,505
2,167 2,314 6,986 2,522 9,508 Other, net 333 (2,811) (5,822)
(8,300) 4,777 (3,523) --- ------ ------ ------ ----- ------ Total
costs and expenses 124,050 136,033 127,737 387,820 102,232 490,052
------- ------- ------- ------- ------- ------- Operating income
26,312 42,212 47,976 116,500 30,508 147,008 Equity earnings -
Wamsutter 21,194 37,480 20,801 79,475 9,063 88,538 Discovery
investment income (loss) 13,621 8,570 8,244 30,435 (8,078) 22,357
Interest expense (17,673) (16,683) (16,437) (50,793) (16,427)
(67,220) Interest income 175 243 249 667 39 706 --- --- --- --- --
--- Net income $43,629 $71,822 $60,833 $176,284 $15,105 $191,389
======= ======= ======= ======== ======= ======== Allocation of net
income * Net income $43,629 $71,822 $60,833 $176,284 $15,105
$191,389 Allocation of net income (loss) to general partner* 5,981
7,811 7,985 21,777 7,180 28,957 ----- ----- ----- ------ -----
------ Allocation of net income to limited partners* $37,648
$64,011 $52,848 $154,507 $7,925 $162,432 Net income, per common and
subordinated unit* $0.71 $1.21 $1.00 $2.92 $0.15 $3.07 Weighted
average number of units out- stand- ing 52,774,728 52,774,728
52,775,912 52,775,126 52,777,452 52,775,710 2009 ---- (Thousands,
except per- unit amounts) 1st Qtr 2nd Qtr 3rd Qtr Y-T-D
----------------------- ------- ------- ------- ----- ---------
Revenues: --------- Product sales: Affiliate $30,872 $32,886
$48,977 $112,735 Third-party 2,291 5,178 3,285 10,754 Gathering and
processing: Affiliate 10,610 10,826 10,990 32,426 Third-party
47,255 44,462 48,425 140,142 Storage 8,361 8,101 8,531 24,993
Fractionation 2,557 2,619 2,396 7,572 Other 3,522 2,255 2,549 8,326
----- ----- ----- ----- Total revenues 105,468 106,327 125,153
336,948 Cost and expenses: Product cost and shrink replacement:
Affiliate 8,866 7,446 9,066 25,378 Third-party 11,296 13,092 20,937
45,325 Operating and maintenance expense: Affiliate 11,759 10,615
10,352 32,726 Third-party 28,147 31,766 27,232 87,145 Depreciation,
amortization and accretion 11,184 11,164 11,288 33,636 General and
administrative expense: Affiliate 11,587 11,879 11,551 35,017
Third-party 893 643 646 2,182 Taxes other than income 2,436 2,325
2,586 7,347 Other, net 1,679 (18) (5,019) (3,358) ----- --- ------
------ Total costs and expenses 87,847 88,912 88,639 265,398 ------
------ ------ ------- Operating income 17,621 17,415 36,514 71,550
Equity earnings - Wamsutter 15,321 18,975 23,642 57,938 Discovery
investment income (loss) 812 4,151 11,058 16,021 Interest expense
(15,116) (15,200) (15,281) (45,597) Interest income 34 27 14 75 --
-- -- -- Net income $18,672 $25,368 $55,947 $99,987 ======= =======
======= ======= Allocation of net income * Net income $18,672
$25,368 $55,947 $99,987 Allocation of net income (loss) to general
partner* (372) (137) 921 412 ---- ---- --- --- Allocation of net
income to limited partners* $19,044 $25,505 $55,026 $99,575 Net
income, per common and subordinated unit* $0.36 $0.48 $1.04 $1.88
Weighted average number of units outstanding 52,777,452 52,777,452
52,777,452 52,777,452 *The Net income, per common and subordinated
unit for 2008 amounts have been retrospectively adjusted for new
guidance regarding the application of the two-class method to
calculate earnings per unit for Master Limited Partnerships, which
states, among other things, that the calculation of earnings per
unit should not reflect an allocation of undistributed earnings to
the incentive distribution right (IDR) holders beyond amounts
distributable to IDR holders under the terms of the partnership
agreement. Previously, under generally accepted accounting
principles, we calculated earnings per unit as if all the earnings
for the period had been distributed, which resulted in an
additional allocation of income to the general partner (the IDR
holder) in quarterly periods where an assumed incentive
distribution exceeded the actual incentive distribution. Following
the adoption of this guidance, we no longer calculate assumed
incentive distributions. We adopted this guidance in January 2009,
and have retrospectively Segment Profit & Operating Statistics
(UNAUDITED) 2008 ---- 1st Qtr 2nd Qtr 3rd Qtr Y-T-D 4th Qtr Full
(Thousands) Year ----------- ------- ------- ------- ----- -------
---- Gathering and Processing - West Segment revenues $132,333
$158,563 $155,217 $446,113 $114,025 $560,138 Cost and expenses:
Product cost and shrink replacement 47,446 61,144 53,902 162,492
26,700 189,192 Operating and maintenance expense 40,893 36,677
42,129 119,699 37,014 156,713 Depreciation, amortization and
accretion 10,299 10,136 10,811 31,246 9,969 41,215 Direct general
and administrative expenses 1,930 2,058 2,188 6,176 2,157 8,333
Other, net 2,554 (750) (3,703) (1,899) 960 (939) ----- ---- ------
------ --- ---- Segment operating income 29,211 49,298 49,890
128,399 37,225 165,624 Equity earnings 21,194 37,480 20,801 79,475
9,063 88,538 ------ ------ ------ ------ ----- ------ Segment
profit $50,405 $86,778 $70,691 $207,874 $46,288 $254,162 =======
======= ======= ======== ======= ======== -----------------
Gathering and Processing - Gulf Segment revenues $567 $546 $537
$1,650 $446 $2,096 Cost and expenses: Operating and maintenance
expense 524 519 148 1,191 477 1,668 Depreciation and accretion 153
151 153 457 294 751 Other, net - - - - 6,187 6,187 --- --- --- ---
----- ----- Segment operating income (loss) (110) (124) 236 2
(6,512) (6,510) Discovery investment income (loss) 13,621 8,570
8,244 30,435 (8,078) 22,357 ------ ----- ----- ------ ------ ------
Segment profit (loss) $13,511 $8,446 $8,480 $30,437 ($14,590)
$15,847 ======= ====== ====== ======= ======== ======= ------------
NGL Services Segment revenues $17,462 $19,136 $19,959 $56,557
$18,269 $74,826 Cost and expenses: Product cost 4,652 4,865 3,847
13,364 3,522 16,886 Operating and maintenance expense 5,667 9,336
8,200 23,203 4,317 27,520 Depreciation and accretion 774 715 771
2,260 803 3,063 Direct general and administrative expenses 544 700
631 1,875 707 2,582 Other, net 284 106 195 585 152 737 --- --- ---
--- --- --- Segment profit $5,541 $3,414 $6,315 $15,270 $8,768
$24,038 ====== ====== ====== ======= ====== =======
------------------ Williams Partners: Conway storage revenues
$7,333 $7,102 $8,264 $22,699 $8,730 $31,429 Conway fractionation
volumes (bpd) - our 50% 33,103 38,173 43,829 38,388 40,898 39,019
Carbonate Trend gathering volumes (BBtu/d) 24 23 21 23 19 22
Williams Four Corners: Gathering volumes (BBtu/d) 1,316 1,410 1,406
1,377 1,388 1,380 Plant inlet natural gas volumes (BBtu/d) 547 680
681 636 673 646 NGL equity sales (million gallons) 36 43 43 122 40
162 NGL margin ($/gallon) $0.74 $0.78 $0.88 $0.80 $0.57 $0.75 NGL
production (million gallons) 112 140 134 386 132 518 Wamsutter -
100%: Gathering volumes (BBtu/d) 434 521 506 487 534 499 Plant
inlet natural gas volumes (BBtu/d) 404 427 393 408 413 409 NGL
equity sales (million gallons) 41 36 30 107 32 139 NGL margin
($/gallon) $0.58 $0.63 $0.77 $0.65 $0.40 $0.59 NGL production
(million gallons) 106 114 97 317 98 415 Discovery Producer Services
- 100% Plant inlet natural gas volumes (BBtu/d) 627 614 378 539 211
457 Gross processing margin ($/MMBtu) $0.45 $0.36 $0.48 $0.42 $-
$0.37 NGL equity sales (million gallons) 37 23 21 81 4 85 NGL
production (million gallons) 70 58 43 171 10 181 2009 ----
(Thousands) 1st Qtr 2nd Qtr 3rd Qtr Y-T-D ----------- -------
------- ------- ----- Gathering and Processing - West Segment
revenues $90,778 $91,664 $109,843 $292,285 Cost and expenses:
Product cost and shrink replacement 18,461 19,054 28,059 65,574
Operating and maintenance expense 33,014 35,963 32,189 101,166
Depreciation, amortization and accretion 10,344 10,278 10,375
30,997 Direct general and administrative expenses 2,161 2,300 2,348
6,809 Other, net 3,809 2,194 (2,968) 3,035 ----- ----- ------ -----
Segment operating income 22,989 21,875 39,840 84,704 Equity
earnings 15,321 18,975 23,642 57,938 ------ ------ ------ ------
Segment profit $38,310 $40,850 $63,482 $142,642 ======= =======
======= ======== ---------------------------- Gathering and
Processing - Gulf Segment revenues $486 $459 $350 $1,295 Cost and
expenses: Operating and maintenance expense 575 575 124 1,274
Depreciation and accretion 32 60 33 125 Other, net - - 326 326 - -
--- --- Segment operating income (loss) (121) (176) (133) (430)
Discovery investment income (loss) 812 4,151 11,058 16,021 ---
----- ------ ------ Segment profit (loss) $691 $3,975 $10,925
$15,591 ==== ====== ======= ======= ------------ NGL Services
Segment revenues $14,204 $14,204 $14,960 $43,368 Cost and expenses:
Product cost 1,701 1,484 1,944 5,129 Operating and maintenance
expense 6,317 5,843 5,271 17,431 Depreciation and accretion 808 826
880 2,514 Direct general and administrative expenses 756 764 860
2,380 Other, net 306 113 209 628 --- --- --- --- Segment profit
$4,316 $5,174 $5,796 $15,286 ====== ====== ====== =======
------------------ Williams Partners: Conway storage revenues
$8,361 $8,101 $8,531 $24,993 Conway fractionation volumes (bpd) -
our 50% 36,721 40,688 36,916 38,109 Carbonate Trend gathering
volumes (BBtu/d) 20 19 15 18 Williams Four Corners: Gathering
volumes (BBtu/ d) 1,355 1,321 1,377 1,351 Plant inlet natural gas
volumes (BBtu/d) 653 554 653 620 NGL equity sales (million gallons)
39 39 44 122 NGL margin ($/gallon) $0.32 $0.40 $0.46 $0.39 NGL
production (million gallons) 123 123 143 389 Wamsutter - 100%:
Gathering volumes (BBtu/ d) 534 545 543 541 Plant inlet natural gas
volumes (BBtu/d) 437 419 412 423 NGL equity sales (million gallons)
36 35 37 108 NGL margin ($/gallon) $0.25 $0.39 $0.43 $0.36 NGL
production (million gallons) 105 109 114 328 Discovery Producer
Services - 100% Plant inlet natural gas volumes (BBtu/d) 324 470
569 455 Gross processing margin ($/ MMBtu) $0.10 $0.20 $0.30 $0.22
NGL equity sales (million gallons) 12 25 30 67 NGL production
(million gallons) 30 56 79 165 DATASOURCE: Williams Partners L.P.
CONTACT: Jeff Pounds, media relations, +1-918-573-3332, Sharna
Reingold, investor relations, +1-918-573-2078, both of Williams Web
Site: http://www.williamslp.com/
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