Williams Partners Reports First-Quarter 2013 Financial Results, Updated Guidance

Williams Partners Reports First-Quarter 2013 Financial Results, Updated Guidance

  • 1Q 2013 Net Income Is $321 Million, $0.50 per Common Unit
  • Solid First-Quarter DCF Yields 1.05x Coverage Ratio
  • DCF Up 5% From Year Ago Despite 50% Lower NGL Margins and Ethane Rejection
  • Lowering 2013-14 Earnings and Cash Flow Guidance Driven Primarily By Higher Natural Gas Prices and Lower NGL Prices
  • Williams Agrees to Provide Up to $200 Million IDR Waivers to Support Williams Partners and Bridge to Expected Cash Flow Growth from Large Portfolio of Primarily Fee-Based Development Projects
  • Updating and Extending Guidance for Annual LP Cash-Distribution Growth: Up 8% to 9% in 2013; 6% to 8% in 2014 and 2015
  • Expect More than 60% DCF Growth from 2013 to 2015

TULSA, Okla.--(BUSINESS WIRE)-- Williams Partners L.P. (NYSE: WPZ  ) :

   
Summary Financial Information 1Q
Amounts in millions, except per-unit and coverage ratio amounts. 2013     2012
(Unaudited)
 
Net income $ 321 $ 408  
Net income per common L.P. unit $ 0.50 $ 0.85  
             
 
Distributable cash flow (DCF) (1) $ 497 $ 537
Less: Pre-partnership DCF (2)     (62 )
DCF attributable to partnership operations $ 497 $ 475  
 
Cash distribution coverage ratio (1) 1.05x 1.31x
(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 1Q 2012, since these periods were prior to the receipt of cash flows from the assets.
 

Williams Partners L.P. (NYSE: WPZ  ) today announced unaudited first-quarter 2013 net income of $321 million, or $0.50 per common limited-partner unit, compared with net income of $408 million, or $0.85 per common limited-partner unit for first-quarter 2012. 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.

The decline in net income during first-quarter 2013 is primarily due to a sharp decline in NGL margins from near historic highs in first-quarter 2012 and related ethane rejection. NGL margins declined 50 percent from the first-quarter of 2012 as continued low ethane prices drove system wide ethane rejection and propane and butane prices also remained at depressed levels.

Higher olefin margins, particularly higher ethylene margins at Geismar, helped mitigate the impact of the lower NGL margins and higher expenses.

Distributable Cash Flow & Distributions

For first-quarter 2013, Williams Partners generated $497 million in distributable cash flow attributable to partnership operations, compared with $475 million in DCF attributable to partnership operations in first-quarter 2012.

The increase in DCF was due to the growth of the partnership via the acquisition of the Gulf Olefins assets in 2012, as well as higher gathered volumes, higher fee-based revenues and lower maintenance capital, partially offset by the previously mentioned decline in NGL margins.

Williams Partners recently announced that it increased its quarterly cash distribution to unitholders to $0.8475 per unit, a 9 percent increase over the year-ago amount.

CEO Perspective

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

“We’re pleased to report a solid first quarter in the face of NGL margins that were 50 percent lower than in the prior year. Our growing fee-based business and our timely acquisition of the Williams’ Geismar ethylene complex helped to mitigate the less favorable NGL commodity environment. Our focus continues to be on executing on the wide variety of growth opportunities across all our businesses that support an expected increase of more than 60 percent in our DCF from 2013 through 2015.

“We expect that ongoing tremendous North American energy infrastructure needs will continue to combine with Williams Partners’ unique capabilities to create a continuing robust set of investment opportunities. As such, we have visibility to very strong growth in our businesses and cash flows beyond 2015 as our new investments develop and as we continue to seize many attractive investment opportunities.”

Business Segment Performance

Beginning with its first-quarter 2013 results, Williams Partners’ operations are reported through four business segments, Northeast G&P, Atlantic-Gulf, West and NGL & Petchem Services. Prior-period results have been recast to reflect the partnership’s new segment reporting structure.

   
1Q
       
Segment Profit * Segment Profit + DD&A *
Amounts in millions 2013 2012 2013 2012
 
Northeast G&P ($9 ) $4 $20 $9
Atlantic-Gulf 159 165 261 257
West 186 311 247 369
NGL & Petchem Services 120   71   127   75
Total $456 $551 $655 $710
 
Adjustments (6 ) 1 (6 ) 1
 
Total $450   $552 $649   $711
* Schedules reconciling segment profit to adjusted segment profit and adjusted segment profit + DD&A are attached to this press release.
           
Williams Partners 2012 2013
Key Operational Metrics 1Q   2Q   3Q   4Q 1Q 1Q Change
Year-over-year Sequential
Fee-based Revenues (millions) $ 651 $ 647 $ 659 $ 694 $ 684 5 % -1 %
 
NGL Margins (millions) $ 242 $ 189 $ 167 $ 154 $ 121 -50 % -21 %
Ethane Equity sales (million gallons) 176 166 163 141 23 -87 % -84 %
Per-Unit Ethane NGL Margins ($/gallon) $ 0.36 $ 0.22 $ 0.12 $ 0.04 $ 0.04 -89 % 0 %
Non-Ethane Equity sales (million gallons) 132 129 138 138 123 -7 % -11 %
Per-Unit Non-Ethane NGL Margins ($/gallon) $ 1.36 $ 1.17 $ 1.07 $ 1.08 $ 0.98 -28 % -9 %
 
Olefin Margins (millions) $ 74 $ 70 $ 77 $ 77 $ 118 59 % 53 %
Geismar ethylene sales volumes (millions of lbs.) 284 250 263 261 246 -13 % -6 %
Geismar ethylene margin ($/pound) $ 0.18 $ 0.20 $ 0.22 $ 0.23 $ 0.37 106 % 61 %
 
 

Northeast G&P

Northeast G&P includes the partnership’s midstream gathering and processing business in the Marcellus and Utica shale regions, as well its 51-percent equity investment in Laurel Mountain Midstream (LMM), and its 47.5-percent equity investment in Caiman Energy II. 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 a segment loss of $9 million for first-quarter 2013, compared with segment profit of $4 million in first-quarter 2012.

Continued strong results in the Susquehanna Supply Hub were more than offset by costs associated with developing business in the Ohio Valley Midstream system. Higher costs for the Ohio Valley Midstream system were also affected by various operational issues including system freeze-offs, line repairs and replacements, as well as expenses associated with the rapid growth and the high liquids content in this developing area.

Atlantic-Gulf

Atlantic-Gulf includes the Transco interstate gas pipeline, the partnership’s significant natural gas gathering and processing and crude production handling and transportation in the Gulf Coast region, as well as its 50-percent equity investment in the Gulfstream interstate gas pipeline, its 60-percent equity investment in the Discovery onshore/offshore natural gas gathering and processing system, and a 51-percent consolidated interest in the Constitution interstate gas pipeline development project.

Atlantic-Gulf reported segment profit of $159 million for first-quarter 2013, compared with $165 million for first-quarter 2012.

The lower segment profit in first-quarter 2013 was due to lower NGL margins in the Gulf processing facilities as well as lower equity earnings from the Discovery investment driven by the lower NGL margins. Lower operating costs partially offset these negative effects during the first quarter.

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 first-quarter 2013 segment profit of $186 million, compared with $311 million for first-quarter 2012.

The significant decline in West’s segment profit during first-quarter 2013 was due to lower NGL margins driven by lower NGL prices and higher gas prices as well as related ethane rejection. Fee-based revenue also declined during the first quarter due to severe winter weather, including production freeze-offs. Increased natural gas transportation revenues associated with Northwest Pipeline’s new rates partially offset this decline.

NGL & Petchem Services

NGL & Petchem Services includes the partnership’s NGL and natural gas marketing business, an NGL fractionator and storage facilities near Conway, Kan., a 50-percent equity interest in Overland Pass Pipeline, and an 83.3% interest and operatorship of 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 first-quarter 2013 segment profit of $120 million, compared with $71 million for first-quarter 2012.

An increase in olefin product margins, primarily ethylene, drove the increase in segment profit during the first quarter. The higher olefin margins were driven by lower average per-unit ethane and propane feedstock prices and higher per-unit ethylene prices.

Guidance

Williams Partners is lowering its 2013-14 guidance for earnings and distributable cash flow primarily to reflect expected lower NGL processing margins due to higher natural gas price and lower NGL price assumptions and related lower ethane transportation volumes. Additionally, the lower segment profit guidance in 2014 includes changes in in-service date assumptions for certain projects. Partially offsetting these less favorable assumptions are expectations for continued strong olefins margins.

As a result of the expected lower distributable cash flow for 2013 and 2014, Williams Partners is updating guidance for cash distributions per limited partner unit to reflect an annual growth rate of 8 percent to 9 percent for 2013 and 6 percent to 8 percent for 2014. Williams Partners is introducing cash distribution growth guidance for 2015at 6 percent to 8 percent. The partnership’s guidance includes an assumed growth rate in the limited partner cash distribution of 1.5 cents per quarter beginning with distributions expected to be declared in July 2013 and paid in August 2013.

Additionally, Williams has agreed to waive incentive distribution rights of up to $200 million over the next four quarters to boost Williams Partners’ expected cash distribution coverage ratio to .90x for 2013. These IDR waivers provide Williams Partners with short-term cash distribution support as a large platform of growth projects moves toward completion. Williams Partners expects a return to stronger coverage ratios in 2014 and beyond as new projects come into service. Williams Partners expects cash coverage of .97x in 2014 and 1.03x in 2015 without the benefit of IDR waivers.

Capital expenditures included in guidance have been adjusted to reflect previously announced projects including the Three Rivers Midstream joint venture with Shell, as well as a number of additional projects and revisions.

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

           
Commodity Price Assumptions and Financial
Outlook at Midpoint of Guidance (1)       2013         2014         2015  
Commodity Price Assumptions
Ethane ($ per gallon) $ 0.28 $ 0.30 $ 0.30
Propane ($ per gallon) $ 0.96 $ 1.15 $ 1.15
Natural Gas - NYMEX ($/MMBtu) $ 4.06 $ 4.25 $ 4.25
Ethylene Spot ($ per pound) $ 0.59 $ 0.60 $ 0.60
Propylene Spot ($ per pound) $ 0.63 $ 0.59 $ 0.62
Crude Oil - WTI ($ per barrel) $ 91 $ 90 $ 90
 
NGL to Crude Oil Relationship (2) 36 % 39 % 39 %
 
Crack Spread ($ per pound) (3) $ 0.47 $ 0.47 $ 0.47
Composite Frac Spread ($ per gallon) (4) $ 0.45 $ 0.49 $ 0.49
 
Williams Partners Guidance                  
Amounts are in millions except coverage ratio.
DCF attributable to partnership ops. (5) $ 1,675 $ 2,350 $ 2,720
 
Total Cash Distribution (6) $ 1,853 $ 2,414 $ 2,649
 
Cash Distribution Coverage Ratio (5) .90x .97x 1.03x
 
Adjusted Segment Profit (5):
Northeast G&P $ 100 $ 340 $ 515
Atlantic Gulf 515 715 990
West 620 580 555
NGL & Petchem   440     755     760  
Total Adjusted Segment Profit $ 1,675 $ 2,390 $ 2,820
 
Adjusted Segment Profit + DD&A (5):
Northeast G&P $ 230 $ 510 $ 720
Atlantic Gulf 905 1,150 1,480
West 860 815 790
NGL & Petchem   470     805     815  
Total Adjusted Segment Profit + DD&A $ 2,465 $ 3,280 $ 3,805
 
Capital Expenditures:
Maintenance $ 330 $ 375 $ 395
Growth   3,415     2,090     1,465  
Total Capital Expenditures $ 3,745 $ 2,465 $ 1,860
(1) Guidance ranges for 2013-14 are available in the Data Book. Guidance ranges for 2015 will be presented at Analyst Day on May 21.
(2) Calculated as the price of natural gas liquids as a percentage of the price of crude oil on an equal volume basis.
(3) Crack spread is based on Delivered U.S. Gulf Coast Ethylene and Mont Belvieu Ethane.
(4) Composite frac spread is based on Henry Hub natural gas and Mont Belvieu NGLs.
(5) 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.
(6) The cash distributions in guidance are on an accrual basis and reflect an approximate annual growth rate in limited partner distributions of 8% to 9% for 2013 and 6% to 8% for each 2014 and 2015. Total cash distributions for 2013 are reduced by expected Williams IDR waivers.
 
 

Annual Analyst Day Meeting Set for May 21

Williams plans to host its annual Analyst Day on Tuesday, May 21. The event will feature in-depth presentations covering all of Williams' and Williams Partners L.P.'s energy infrastructure businesses. The event is scheduled from 8:30 a.m. to approximately 3 p.m. EDT.

Williams’ Analyst Day will be broadcast live via webcast beginning on May 21 at 8:30 a.m. EDT. Participants can access the webcast at www.williams.com or www.williamslp.com. Slides will be available on the morning of the event on both web sites for viewing, downloading and printing. A replay of the Analyst Day webcast will be available for two weeks following the event at the websites listed above.

First-Quarter 2013 Materials to be Posted Shortly, Q&A Webcast Scheduled for Tomorrow

Williams Partners’ first-quarter 2013 financial results package will be posted shortly at www.williamslp.com. The package will include the data book and analyst package, and the investor presentation with a recorded commentary from Alan Armstrong, CEO of Williams Partners’ general partner.

Williams Partners and Williams will host a joint Q&A live webcast on Wednesday, May 8, at 9:30 a.m. EDT. A limited number of phone lines will be available at (800) 390-5705. International callers should dial (719) 325-2461. A link to the 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-Q

The partnership plans to file its first-quarter 2013 Form 10-Q with the Securities and Exchange Commission this 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, distributions 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. (NYSE: 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 (NYSE: WMB  ) owns approximately 68 percent of Williams Partners, including the general-partner interest. More information is available at www.williamslp.com, where the partnership routinely posts important information.

Williams Partners L.P. is a limited partnership formed by The Williams Companies, Inc. 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. You typically can identify forward-looking statements by various forms of words such as "anticipates," "believes," "seeks," "could," "may," "should," "continues," "estimates," "expects," "assumes," "forecasts," "intends," "might," "goals," "objectives," "targets," "planned," "potential," "projects," "scheduled," "will," "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;
  • Seasonality of certain business components;
  • 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;
  • Ability to acquire new businesses and assets and 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 risk of our customers and counterparties;
  • 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 capital;
  • The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate;
  • Risks associated with weather conditions 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 our quarterly reports on Form 10-Q available from our offices or from our website.

 
 

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, distributions to noncontrolling interest 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
               
Williams Partners L.P.
Reconciliation of Non-GAAP "Distributable cash flow" to GAAP "Net income"
 
Net income $ 408 $ 243 $ 290 $ 291 $ 1,232 $ 321
Depreciation and amortization 159 171 185 199 714 199
Regulatory accounting adjustment for certain depreciation - - - - - (9 )

Non-cash amortization of debt issuance costs included in interest expense

4 3 4 3 14 3
Equity earnings from investments (30 ) (27 ) (30 ) (24 ) (111 ) (18 )
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
Impairment of certain assets - - 6 - 6 -
Net reimbursements from Williams under omnibus agreements 6 1 4 5 16 4
Maintenance capital expenditures   (62 )   (113 )   (129 )   (103 )   (407 )   (43 )
 
Distributable cash flow excluding equity investments 485 299 340 385 1,509 459
Plus: Equity investments cash distributions to Williams Partners L.P.   52     46     34     40     172     38  
 
Distributable cash flow 537 345 374 425 1,681 497
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  
 
 
Total cash distributed $ 362 $ 373 $ 394 $ 442 $ 1,571 $ 473
 
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  
 
Net income divided by Total cash distributed   1.13     0.65     0.74     0.66     0.78     0.68  
 
 
 
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
 
Segment profit (loss):
Northeast G&P $ 4 $ (20 ) $ (4 ) $ (17 ) $ (37 ) $ (9 )
Atlantic-Gulf 165 127 124 158 574 159
West 311 239 223 207 980 186
NGL & Petchem Services   71   45     86     93     295     120  
Total segment profit $ 551 $ 391   $ 429   $ 441   $ 1,812   $ 456  
 
Adjustments:

Northeast G&P

Acquisition and transition-related costs $ - $ 19 $ 4 $ 2 $ 25 $ -
Share of impairments at equity method investee   -   -     -     5     5     -  
Total Northeast G&P adjustments - 19 4 7 30 -

Atlantic-Gulf

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

NGL & Petchem Services

Loss due to Geismar furnace fire   -   -     4     1     5     -  
Total NGL & Petchem Services adjustments - - 4 1 5 -
           
Total adjustments included in segment profit $ 1 $ 13   $ 15   $ 8   $ 37   $ (6 )
 
Adjusted segment profit (loss):
Northeast G&P $ 4 $ (1 ) $ - $ (10 ) $ (7 ) $ (9 )
Atlantic-Gulf 166 121 131 158 576 153
West 311 239 223 207 980 186
NGL & Petchem Services   71   45     90     94     300     120  
Total adjusted segment profit $ 552 $ 404   $ 444   $ 449   $ 1,849   $ 450  
 
Depreciation and amortization (DD&A):
Northeast G&P $ 5 $ 17 $ 23 $ 31 $ 76 $ 29
Atlantic-Gulf 92 92 97 100 381 102
West 58 57 58 61 234 61
NGL & Petchem Services   4   5     7     7     23     7  
Total depreciation and amortization $ 159 $ 171   $ 185   $ 199   $ 714   $ 199  
 
Adjusted segment profit (loss) + DD&A
Northeast G&P $ 9 $ 16 $ 23 $ 21 $ 69 $ 20
Atlantic-Gulf 258 213 228 258 957 255
West 369 296 281 268 1,214 247
NGL & Petchem Services   75   50     97     101     323     127  
Total adjusted segment profit + DD&A $ 711 $ 575   $ 629   $ 648   $ 2,563   $ 649  
 
 
Williams Partners L.P.
    2013 Guidance     2014 Guidance     2015 Guidance
(Dollars in millions, except coverage ratios) Midpoint Midpoint Midpoint
 
Reconciliation of Non-GAAP "Distributable Cash Flow" to GAAP "Net income"
 
Net income $ 1,155 $ 1,793 $ 2,113
Depreciation and amortization 790 890 985
Maintenance capital expenditures (330 ) (375 ) (395 )
Attributable to Noncontrolling Interests - (53 ) (100 )
Other / Rounding   60     95     117  
 
Distributable cash flow $ 1,675   $ 2,350   $ 2,720  
 
Total cash to be distributed $ 1,853 $ 2,414 $ 2,649
 
Coverage ratios:
 
Distributable cash flow divided by Total cash to be distributed   0.90     0.97     1.03  
 
Net income divided by Total cash to be distributed   0.62     0.74     0.80  
 
 
Reconciliation of Non-GAAP "Adjusted Segment Profit" and "Adjusted Segment Profit + DD&A" to GAAP "Segment Profit"
 
Segment Profit:
Northeast G&P $ 100 $ 340 $ 515
Atlantic-Gulf 521 715 990
West 620 580 555
NGL & Petchem Services   440     755     760  
Total Segment Profit $ 1,681   $ 2,390   $ 2,820  
Adjustments:
Northeast G&P
Atlantic-Gulf- Litigation settlement gain $ (6 )
West
NGL & Petchem Services      
Total Adjustments $ (6 ) $ -   $ -  
Adjusted segment profit:
Northeast G&P $ 100 $ 340 $ 515
Atlantic-Gulf 515 715 990
West 620 580 555
NGL & Petchem Services   440     755     760  
Adjusted segment profit $ 1,675   $ 2,390   $ 2,820  
Depreciation and amortization (DD&A):
Northeast G&P $ 130 $ 170 $ 205
Atlantic-Gulf 390 435 490
West 240 235 235
NGL & Petchem Services   30     50     55  
Total depreciation and amortization $ 790   $ 890   $ 985  
Adjusted segment profit + DD&A:
Northeast G&P $ 230 $ 510 $ 720
Atlantic-Gulf 905 1,150 1,480
West 860 815 790
NGL & Petchem Services   470     805     815  
Total adjusted segment profit + DD&A $ 2,465   $ 3,280   $ 3,805  



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

KEYWORDS:   United States  North America  Oklahoma

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