Attached files
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| 8-K - FORM 8-K - Williams Partners L.P. | c62988e8vk.htm |
Exhibit 99.1
News Release |
Williams Partners L.P. (NYSE: WPZ) One Williams Center Tulsa, OK 74172 800-600-3782 www.williamslp.com |
 |
DATE: Feb. 17, 2011
MEDIA CONTACT:
|
INVESTOR CONTACTS: | |||||
Jeff Pounds
|
Travis Campbell | Sharna Reingold | David Sullivan | |||
(918) 573-3332
|
(918) 573-2944 | (918) 573-2078 | (918) 573-9360 |
Williams Partners L.P. Reports Fourth-Quarter and Year-End 2010 Financial Results
| • | Net Income for 2010 is $1.1 Billion, $2.66 per Unit | ||
| • | 2010 Distributable Cash Flow attributable to partnership operations Up 509% for Year | ||
| • | Cash Distribution Coverage Ratio Strong at 1.25x for 4Q and 1.30x for full year 2010 | ||
| • | Higher NGL Profits Drive 21% increase in Adjusted Segment Profit for Year, 10% for 4Q | ||
| • | 2011-12 Guidance Increased to Reflect Expected Higher Per-unit NGL Margins and Benefits of Growth Capital | ||
| • | Quarterly Limited Partner Cash Distribution Expected to Increase 6-10% Annually Through 2012 |
| Summary Financial Information | Full Year | 4Q | |||||||||||||||
| Amounts in millions, except per-unit amounts. | 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (Unaudited) | |||||||||||||||||
Net income |
$ | 1,101 | $ | 1,036 | $ | 286 | $ | 352 | |||||||||
Net income per common L.P. unit |
$ | 2.66 | $ | 2.88 | $ | 0.76 | $ | 0.99 | |||||||||
Distributable cash flow (DCF) (1) |
$ | 1,387 | $ | 1,282 | $ | 347 | $ | 351 | |||||||||
Less: Pre-partnership DCF (2) |
(223 | ) | (1,091 | ) | (12 | ) | (283 | ) | |||||||||
DCF attributable to partnership operations |
$ | 1,164 | $ | 191 | $ | 335 | $ | 68 | |||||||||
Cash distribution coverage ratio (1) |
1.30 | x | 1.39 | x | 1.25 | x | 1.97 | x | |||||||||
| (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) | For 2010, this amount represents DCF for January 2010 from the assets acquired in February 2010, as well as amounts for the assets acquired in November 2010. For 2009, this amount represents all of the DCF for the assets acquired in 2010 since this entire period was prior to the receipt of cash flows from the acquired assets. |
| Williams Partners L.P. (NYSE: WPZ) | Full-Year 2010 Financial Results — Feb. 17, 2011 | Page 1 of 10 |
TULSA, Okla. — Williams Partners L.P. (NYSE: WPZ) today announced unaudited 2010 net income of
$1,101 million, compared with 2009 net income of $1,036 million. Higher per-unit natural gas liquid
(NGL) margins in the midstream business drove the higher net income for 2010. Higher net interest
expense of $163 million associated with new debt issuances made in conjunction with financing the
assets acquired from Williams (NYSE: WMB) in February 2010 significantly reduced 2010 net income
compared with the recast 2009 results.
The results throughout this release have been recast to reflect the first-quarter and
fourth-quarter 2010 asset acquisitions. In the recasting of the partnership’s net income, all of
the acquired assets’ net income occurring prior to the closing date was allocated to Williams. The
recast 2009 results include the acquired assets’ historical net income amounts, but do not include
the incremental interest expense associated with financing the acquisitions.
Net income per common limited-partner unit for 2010 was $2.66, compared with $2.88 per unit for
2009. For 2009, Williams waived its incentive distribution rights (IDR), which increased net income
per common limited-partner unit for 2009 by approximately 55 cents.
For fourth-quarter 2010, Williams Partners reported net income of $286 million, compared with $352
million for the same period in 2009. The higher net interest expense of $54 million associated
with the debt issuances noted above and the absence of a $40 million gain on the sale of the
Cameron Meadows facility in fourth-quarter 2009 were the drivers of the lower net income in
fourth-quarter 2010. Higher NGL margins in fourth-quarter 2010 partially offset these items.
Net income per common limited partner unit for fourth-quarter 2010 was $0.76, compared with $0.99
per unit in fourth-quarter 2009. Williams’ waiver of IDRs in 2009 favorably impacted
fourth-quarter 2009 net income per common limited partner unit by approximately 14 cents.
There is a more detailed discussion of the midstream and gas pipeline business results in the
business segment performance section below.
Asset Acquisitions Drive Substantial Increases in Distributable Cash Flow in 2010
For 2010, Williams Partners’ distributable cash flow attributable to partnership operations was
$1,164 million, compared with $191 million for 2009. For fourth-quarter 2010, DCF attributable to
partnership operations was $335 million, compared with $68 million for the same period in 2009.
| Williams Partners L.P. (NYSE: WPZ) | Full-Year 2010 Financial Results — Feb. 17, 2011 | Page 2 of 10 |
The substantial increase in DCF attributable to partnership operations is primarily due to the
growth of the partnership via the first-quarter 2010 asset acquisitions.
CEO Perspective
“This past year was a transformative one for Williams Partners, as the first-quarter asset
acquisitions from Williams made us into one of the largest energy MLPs in the country,” said Alan
Armstrong, president and chief executive officer of the general partner of Williams Partners.
“We delivered on the partnership’s new growth potential throughout the year, as we increased our
investment in Overland Pass and acquired additional gathering and processing assets in the Piceance
Basin and the Marcellus Shale,” Armstrong said. “We also recently announced the Northeast Supply
Link expansion on Transco, which will be anchored by the growing supply in the Marcellus.
“Major projects were placed in service as well, including expansion of our Echo Springs facility in
Wyoming, and the Perdido Norte project in the Gulf of Mexico, which is expected to contribute
significant cash flows in 2011 and beyond,” Armstrong said.
Earnings, Capital Expenditure Guidance Updated; Cash Distribution Guidance Initiated
Williams Partners’ updated assumptions for certain energy commodity prices for 2011-12 and the
corresponding guidance for the company’s earnings and capital expenditures are displayed in the
following table.
The partnership is raising its 2011-12 earnings guidance based on higher expected per-unit NGL
margins and benefits of growth capital.
The partnership is also initiating guidance on the quarterly cash distributions to its
limited-partner and general-partner unitholders. The partnership expects to increase distributions
to its limited-partner unitholders by approximately 6 to 10 percent annually. These increases will
also drive increases in incentive distributions to Williams, the partnership’s general partner.
Williams Partners has increased its quarterly distribution for the last four consecutive quarters
following the major asset acquisitions in February 2010. The planned distribution increases are
supported by current growth projects and the expectation of continuing strong business performance.
| Williams Partners L.P. (NYSE: WPZ) | Full-Year 2010 Financial Results — Feb. 17, 2011 | Page 3 of 10 |
| Commodity Price Assumptions and | |||||||||||||||||||||||||
| Average NGL Margins | 2011 | 2012 | |||||||||||||||||||||||
| As of Feb. 17, 2011 | Low | Mid | High | Low | Mid | High | |||||||||||||||||||
Natural Gas ($ / MMBtu): |
|||||||||||||||||||||||||
NYMEX |
$ | 3.40 | $ | 4.25 | $ | 5.10 | $ | 4.00 | $ | 5.00 | $ | 6.00 | |||||||||||||
Rockies |
$ | 3.10 | $ | 3.85 | $ | 4.60 | $ | 3.65 | $ | 4.55 | $ | 5.45 | |||||||||||||
San Juan |
$ | 3.20 | $ | 4.00 | $ | 4.80 | $ | 3.70 | $ | 4.65 | $ | 5.60 | |||||||||||||
Oil / NGL: |
|||||||||||||||||||||||||
Crude Oil — WTI ($ per barrel) |
$ | 70 | $ | 87.50 | $ | 105 | $ | 71 | $ | 89 | $ | 107 | |||||||||||||
Crude to Gas Ratio |
20.6 | x | 20.6 | x | 20.6 | x | 17.8 | x | 17.8 | x | 17.8 | x | |||||||||||||
NGL to Crude Oil Relationship (1) |
52 | % | 53 | % | 53 | % | 52 | % | 54 | % | 55 | % | |||||||||||||
Average NGL Margins ($ per gallon) (2) |
$ | 0.52 | $ | 0.68 | $ | 0.83 | $ | 0.50 | $ | 0.68 | $ | 0.85 | |||||||||||||
Williams Partners Guidance |
|||||||||||||||||||||||||
Amounts are in millions except coverage ratio. |
|||||||||||||||||||||||||
| Low | Mid | High | Low | Mid | High | ||||||||||||||||||||
DCF attributable to partnership ops. (3) |
$ | 1,150 | $ | 1,365 | $ | 1,580 | $ | 1,400 | $ | 1,650 | $ | 1,900 | |||||||||||||
Total Cash Distribution (4) |
$ | 1,146 | $ | 1,175 | $ | 1,205 | $ | 1,289 | $ | 1,369 | $ | 1,449 | |||||||||||||
Cash Distribution Coverage Ratio (3) |
1.0 | x | 1.2 | x | 1.3 | x | 1.1 | x | 1.2 | x | 1.3 | x | |||||||||||||
Adjusted Segment Profit (3): |
|||||||||||||||||||||||||
Gas Pipeline |
$ | 650 | $ | 670 | $ | 690 | $ | 650 | $ | 670 | $ | 690 | |||||||||||||
Midstream |
900 | 1,100 | 1,300 | 1,025 | 1,275 | 1,525 | |||||||||||||||||||
Total Adjusted Segment Profit |
$ | 1,550 | $ | 1,770 | $ | 1,990 | $ | 1,675 | $ | 1,945 | $ | 2,215 | |||||||||||||
Adjusted Segment Profit + DD&A: |
|||||||||||||||||||||||||
Gas Pipeline |
$ | 1,000 | $ | 1,030 | $ | 1,060 | $ | 1,010 | $ | 1,040 | $ | 1,070 | |||||||||||||
Midstream |
1,160 | 1,370 | 1,580 | 1,300 | 1,560 | 1,820 | |||||||||||||||||||
Total Adjusted Segment Profit + DD&A |
$ | 2,160 | $ | 2,400 | $ | 2,640 | $ | 2,310 | $ | 2,600 | $ | 2,890 | |||||||||||||
Capital Expenditures: |
|||||||||||||||||||||||||
Maintenance |
$ | 490 | $ | 513 | $ | 535 | $ | 380 | $ | 415 | $ | 450 | |||||||||||||
Growth |
1,090 | 1,230 | 1,370 | 770 | 885 | 1,000 | |||||||||||||||||||
Total Capital Expenditures |
$ | 1,580 | $ | 1,743 | $ | 1,905 | $ | 1,150 | $ | 1,300 | $ | 1,450 | |||||||||||||
| (1) | This is calculated as the price of natural gas liquids as a percentage of the price of crude oil on an equal volume basis. | |
| (2) | In addition to the effect of commodity prices, per-unit margins are increasing because of more percent-of-liquids contracts. | |
| (3) | Distributable Cash Flow, Cash Distribution Coverage Ratio and Adjusted Segment Profit are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release. | |
| (4) | The cash distributions in guidance reflects an approixmate 6% (low), 8% (midpoint), and 10% (high) increase in quarterly limited partner cash distributions annually through 2012. |
| Williams Partners L.P. (NYSE: WPZ) | Full-Year 2010 Financial Results — Feb. 17, 2011 | Page 4 of 10 |
Business Segment Performance
Williams Partners’ operations are reported through two business segments, Gas Pipeline and
Midstream Gas & Liquids.
Gas Pipeline includes the partnership’s interstate natural gas pipelines and pipeline joint venture
investments. Midstream Gas & Liquids includes the partnership’s natural
gas gathering, treating and processing business and is comprised of several wholly-owned and
partially-owned subsidiaries.
| Consolidated Segment Profit | Full Year | 4Q | |||||||||||||||
| Amounts in millions | 2010 | 2009 | 2010 | 2009 | |||||||||||||
Gas Pipeline |
$ | 637 | $ | 635 | $ | 159 | $ | 160 | |||||||||
Midstream Gas & Liquids |
937 | 682 | 259 | 264 | |||||||||||||
Total Segment Profit |
$ | 1,574 | $ | 1,317 | $ | 418 | $ | 424 | |||||||||
Adjustments |
(32 | ) | (39 | ) | 8 | (35 | ) | ||||||||||
Adjusted Segment Profit* |
$ | 1,542 | $ | 1,278 | $ | 426 | $ | 389 | |||||||||
| * | A schedule reconciling segment profit to adjusted segment profit is attached to this press release. |
Gas Pipeline
Williams Partners owns interests in three major interstate natural gas pipeline systems — Transco,
Northwest Pipeline and Gulfstream. Transco and Northwest Pipeline have a combined total annual
throughput of approximately 2,800 trillion British Thermal Units of natural gas, which is
approximately 12 percent of the natural gas consumed in the United States. Combined peak-day
delivery capacity is approximately 13 billion cubic feet per day (Bcf/d).
Gas Pipeline reported segment profit of $637 million for 2010, compared with $635 million for 2009.
Higher transportation revenues from Transco expansion projects placed into service in 2009 and
2010, mostly offset by lower other service revenues and higher operating costs, drove the slight
increase in segment profit for 2010.
The gas pipeline business has a significant portfolio of expansion projects to expand its services
to key markets over the next several years. A number of those projects are expected to be placed
into service during 2011, including the Mobile Bay South II, Pascagoula expansion, and 85 North
(phase two) expansions.
| Williams Partners L.P. (NYSE: WPZ) | Full-Year 2010 Financial Results — Feb. 17, 2011 | Page 5 of 10 |
The Mobile Bay South II expansion project involves the addition of compression at Transco’s Station
85 in Choctaw County, Ala., and modifications to existing facilities at Station 83 in Mobile
County, Alabama. The expansion will provide additional firm transportation service southbound on
the Mobile Bay line from Station 85 to various delivery points, increasing capacity by 380 thousand
dekatherms per day (Mdt/d).
The 85 North Expansion involves an expansion of Transco’s existing natural gas transmission system
from Station 85 in Choctaw County, Ala., to various delivery points as far north as North Carolina.
The first phase, which included 90 Mdt/d, was placed into service in July 2010. The second phase,
which will be placed into service this year, will add an additional 219 Mdt/d of capacity.
The Pascagoula expansion involves the construction of a new pipeline to be jointly owned with
Florida Gas Transmission connecting the existing Mobile Bay Lateral to the outlet pipeline of a
proposed LNG import terminal in Mississippi. The partnership’s share of the expansion’s capacity
will be 467 Mdt/d.
Midstream Gas & Liquids
Midstream provides natural gas gathering, treating, and processing; deepwater production handling
and oil transportation; and NGL fractionation, storage and transportation services.
The business reported segment profit of $937 million for 2010, compared with segment profit of $682
million for 2009.
The 37-percent increase in Midstream’s segment profit for 2010 is primarily due to significantly
higher per-unit NGL margins in 2010 compared with 2009. Average per-unit NGL margins for 2010 were
$0.57 per gallon — 46 percent higher than the average per-unit NGL margin of $0.39 per gallon for
the same period in 2009.
| NGL Margin Trend | 2009 | 2010 | |||||||||||||||||||||||||||||||||||||||
| 1Q | 2Q | 3Q | 4Q | Full Year | 1Q | 2Q | 3Q | 4Q | Full Year | ||||||||||||||||||||||||||||||||
NGL margins (millions) |
$ | 58 | $ | 103 | $ | 142 | $ | 169 | $ | 472 | $ | 193 | $ | 166 | $ | 136 | $ | 200 | $ | 695 | |||||||||||||||||||||
NGL equity volumes (gallons in millions) |
292 | 297 | 317 | 314 | 1,220 | 332 | 302 | 271 | 317 | 1,222 | |||||||||||||||||||||||||||||||
Per-unit NGL margins ($/ gallon) |
$ | 0.20 | $ | 0.35 | $ | 0.45 | $ | 0.54 | $ | 0.39 | $ | 0.58 | $ | 0.55 | $ | 0.50 | $ | 0.63 | $ | 0.57 | |||||||||||||||||||||
Higher fee-based revenues also contributed to the improved results in 2010. A gathering rate
increase in the Piceance Basin associated with the assets acquired from Williams in November 2010,
along with a full year of
| Williams Partners L.P. (NYSE: WPZ) | Full-Year 2010 Financial Results — Feb. 17, 2011 | Page 6 of 10 |
processing at Willow Creek, compared with start-up in 2009, were the key
drivers of the higher fee-based revenues for the year.
The midstream business will continue work on several ongoing expansion projects in 2011.
In conjunction with the December 2010 acquisition of Cabot Oil & Gas’s gathering assets in
Susquehanna County, Pa., $150 million has been added to Midstream’s planned expansion capital to
fund the 2011 construction phase of additional gathering assets in northeastern Pennsylvania to
augment the acquired assets, including compression and dehydration.
Construction is also expected to be completed this year on the 33-mile Springville natural gas
gathering pipeline. The Springville pipeline has been increased from a 20-inch
to a 24-inch diameter pipeline in order to pursue future opportunities, and it will connect the
recently acquired and new expansion gathering assets in northeastern Pennsylvania into the Transco
pipeline.
Rapid expansion of the Laurel Mountain gathering system, in which the partnership owns a 51 percent
equity investment, is also under way. This system will ultimately provide more than 1.5 Bcf/d of
gathering capacity to producers in southwestern Pennsylvania.
The combination of the Laurel Mountain expansion and the expansions in northeastern Pennsylvania is
expected to increase the partnership’s total Marcellus Shale gathering capacity to 2.75 Bcf/d by
2015.
The partnership also plans to expand its gathering system infrastructure in the Piceance basin in
2011.
Definitions of Non-GAAP Financial Measures
This press release includes certain financial measures — Distributable Cash Flow, Cash
Distribution Coverage Ratio, and Adjusted Segment Profit — 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. Management believes Adjusted 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 as net income plus depreciation,
amortization and
| Williams Partners L.P. (NYSE: WPZ) | Full-Year 2010 Financial Results — Feb. 17, 2011 | Page 7 of 10 |
accretion 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. 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 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.
Today’s Analyst Call
Management will discuss the year-end 2010 results and 2011-12 outlook during a live webcast
beginning at 11 a.m. EST today. Participants are encouraged to access the webcast and slides for
viewing, downloading and printing at www.williamslp.com.
A limited number of phone lines also will be available at (888) 300-2318. International callers
should dial (719) 325-2402. Replays of the year-end webcast in both streaming and downloadable
podcast formats will be available for two weeks following the event at www.williamslp.com.
Form 10-K
The partnership plans to file its 2010 Form 10-K with the Securities and Exchange Commission (SEC)
next week. The document will be available on both the SEC and Williams Partners web sites.
| Williams Partners L.P. (NYSE: WPZ) | Full-Year 2010 Financial Results — Feb. 17, 2011 | Page 8 of 10 |
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 12 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 75 percent of Williams Partners, including the general-partner interest. More
information is available at www.williamslp.com. Go to
http://www.b2i.us/irpass.asp?BzID=1296&to=ea&s=0 or
http://www.b2i.us/irpass.asp?BzID=630&to=ea&s=0
to join our email list.
# # #
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 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,” “forecasts,” “intends,”
“might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,”
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 segments; and | ||
| • | Natural gas and natural gas liquids prices and demand. |
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 maintain current levels of cash distributions or to pay cash distributions 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 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; | ||
| • | Development of alternative energy sources; | ||
| • | The impact of operational and development hazards; | ||
| • | Costs of, changes in, or the results of laws, government regulations (including climate change legislation and/or potential additional regulation of drilling and completion of wells), 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; | ||
| • | 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; |
| Williams Partners L.P. (NYSE: WPZ) | Full-Year 2010 Financial Results — Feb. 17, 2011 | Page 9 of 10 |
| • | Acts of terrorism; and | ||
| • | 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 25,
2010, and our quarterly reports on Form 10-Q available from our offices or from our website at
www.williamslp.com.
| Williams Partners L.P. (NYSE: WPZ) | Full-Year 2010 Financial Results — Feb. 17, 2011 | Page 10 of 10 |
Financial Highlights and Operating Statistics
(UNAUDITED)
(UNAUDITED)
Final
December 31, 2010
Reconciliation of Non-GAAP Measures
(UNAUDITED)
(UNAUDITED)
This press release includes certain financial measures, Adjusted Segment Profit and Distributable
Cash Flow, 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. Management believes Adjusted 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 as net income plus depreciation,
amortization and accretion and cash distributions from our equity investments less our earnings
from 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 non-cash 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 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.
| 2009 (a) | 2010 | |||||||||||||||||||||||||||||||||||||||
| (Millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr (a) | 2nd Qtr (a) | 3rd Qtr (a) | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Williams Partners L.P. |
||||||||||||||||||||||||||||||||||||||||
Reconciliation of Non-GAAP “Distributable Cash Flow” to GAAP “Net
income” |
||||||||||||||||||||||||||||||||||||||||
Net income |
$ | 184 | $ | 222 | $ | 278 | $ | 352 | $ | 1,036 | $ | 322 | $ | 240 | $ | 253 | $ | 286 | $ | 1,101 | ||||||||||||||||||||
Depreciation and amortization |
135 | 136 | 139 | 143 | 553 | 140 | 140 | 140 | 148 | 568 | ||||||||||||||||||||||||||||||
Non-cash amortization of debt issuance costs included in interest
expense |
2 | 3 | 2 | 3 | 10 | 4 | 5 | 5 | 5 | 19 | ||||||||||||||||||||||||||||||
Equity earnings from investments |
(5 | ) | (16 | ) | (30 | ) | (30 | ) | (81 | ) | (26 | ) | (27 | ) | (24 | ) | (32 | ) | (109 | ) | ||||||||||||||||||||
Distributions to noncontrolling interests |
(6 | ) | (6 | ) | (6 | ) | (5 | ) | (23 | ) | (6 | ) | (6 | ) | (6 | ) | — | (18 | ) | |||||||||||||||||||||
Gain on sale of assets |
— | — | — | (40 | ) | (40 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||
Involuntary conversion gain resulting from Ignacio fire |
1 | — | (5 | ) | — | (4 | ) | — | (4 | ) | — | — | (4 | ) | ||||||||||||||||||||||||||
Involuntary conversion gain resulting from Hurricane Ike |
— | — | — | — | — | — | (7 | ) | (7 | ) | — | (14 | ) | |||||||||||||||||||||||||||
Impairment of Paradox |
— | — | — | — | — | — | — | — | 9 | 9 | ||||||||||||||||||||||||||||||
Reimbursements (payments) from/(to) Williams under omnibus agreement |
— | 1 | 1 | — | 2 | — | (1 | ) | 1 | 3 | 3 | |||||||||||||||||||||||||||||
Maintenance capital expenditures |
(15 | ) | (31 | ) | (103 | ) | (109 | ) | (258 | ) | (32 | ) | (46 | ) | (119 | ) | (104 | ) | (301 | ) | ||||||||||||||||||||
Distributable Cash Flow excluding equity investments |
296 | 309 | 276 | 314 | 1,195 | 402 | 294 | 243 | 315 | 1,254 | ||||||||||||||||||||||||||||||
Plus: Equity investments cash distributions to Williams Partners L.P. |
8 | 15 | 27 | 37 | 87 | 29 | 43 | 29 | 32 | 133 | ||||||||||||||||||||||||||||||
Distributable Cash Flow |
304 | 324 | 303 | 351 | 1,282 | 431 | 337 | 272 | 347 | 1,387 | ||||||||||||||||||||||||||||||
Less: Pre-partnership Distributable Cash Flow |
274 | 293 | 241 | 283 | 1,091 | 158 | 21 | 32 | 12 | 223 | ||||||||||||||||||||||||||||||
Distributable cash flow attributable to partnership operations |
$ | 30 | $ | 31 | $ | 62 | $ | 68 | $ | 191 | $ | 273 | $ | 316 | $ | 240 | $ | 335 | $ | 1,164 | ||||||||||||||||||||
Total cash distributed: |
$ | 34 | $ | 34 | $ | 34 | $ | 34 | $ | 137 | $ | 155 | $ | 221 | $ | 250 | $ | 268 | $ | 894 | ||||||||||||||||||||
Coverage ratios: |
||||||||||||||||||||||||||||||||||||||||
Distributable cash flow attributable to partnership operations
divided by Total cash distributed |
0.88 | 0.92 | 1.80 | 1.97 | 1.39 | 1.76 | 1.43 | 0.96 | 1.25 | 1.30 | ||||||||||||||||||||||||||||||
Net income divided by Total cash distributed |
5.38 | 6.53 | 8.13 | 10.29 | 7.58 | 2.08 | 1.09 | 1.01 | 1.07 | 1.23 | ||||||||||||||||||||||||||||||
| (a) | Amounts reported have been recast to reflect the impact of the November 2010 Piceance Acquisition. |
1
Reconciliation
of GAAP “Segment Profit” to Non-GAAP “Adjusted Segment Profit”
(UNAUDITED)
(UNAUDITED)
| 2009 (a) | 2010 | |||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr (a) | 2nd Qtr (a) | 3rd Qtr (a) | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Gas Pipeline |
$ | 172 | $ | 155 | $ | 148 | $ | 160 | $ | 635 | $ | 169 | $ | 148 | $ | 161 | $ | 159 | $ | 637 | ||||||||||||||||||||
Midstream Gas & Liquids |
82 | 137 | 199 | 264 | 682 | 255 | 213 | 210 | 259 | 937 | ||||||||||||||||||||||||||||||
Segment Profit |
$ | 254 | $ | 292 | $ | 347 | $ | 424 | $ | 1,317 | $ | 424 | $ | 361 | $ | 371 | $ | 418 | $ | 1,574 | ||||||||||||||||||||
Adjustments: |
||||||||||||||||||||||||||||||||||||||||
Gas Pipeline |
||||||||||||||||||||||||||||||||||||||||
Unclaimed property assessment accrual — TGPL |
— | — | — | 3 | 3 | — | (1 | ) | — | — | (1 | ) | ||||||||||||||||||||||||||||
Unclaimed property assessment accrual — NWP |
— | — | — | 1 | 1 | — | (1 | ) | — | — | (1 | ) | ||||||||||||||||||||||||||||
Loss related to Eminence storage facility leak |
— | — | — | — | — | — | — | — | 5 | 5 | ||||||||||||||||||||||||||||||
Gain on sale of base gas from Hester storage field |
— | — | — | — | — | (5 | ) | (3 | ) | — | — | (8 | ) | |||||||||||||||||||||||||||
Total Gas Pipeline adjustments |
— | — | — | 4 | 4 | (5 | ) | (5 | ) | — | 5 | (5 | ) | |||||||||||||||||||||||||||
Midstream Gas & Liquids |
||||||||||||||||||||||||||||||||||||||||
Involuntary conversion gain related to Ignacio |
1 | — | (5 | ) | — | (4 | ) | — | (4 | ) | — | — | (4 | ) | ||||||||||||||||||||||||||
Involuntary conversion gain related to Hurricane
Ike |
— | — | — | — | — | — | (7 | ) | (7 | ) | — | (14 | ) | |||||||||||||||||||||||||||
Gain on sale of Cameron Meadows |
— | — | — | (40 | ) | (40 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||
Gain on sale of part of Ryan Gulch |
— | — | — | — | — | — | — | (12 | ) | — | (12 | ) | ||||||||||||||||||||||||||||
Impairment of Paradox |
— | — | — | — | — | — | — | — | 9 | 9 | ||||||||||||||||||||||||||||||
Settlement related to Green Canyon |
— | — | — | — | — | — | — | — | (6 | ) | (6 | ) | ||||||||||||||||||||||||||||
Restructuring transaction costs |
— | — | — | 1 | 1 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Total Midstream Gas & Liquids adjustments |
1 | — | (5 | ) | (39 | ) | (43 | ) | — | (11 | ) | (19 | ) | 3 | (27 | ) | ||||||||||||||||||||||||
Total adjustments included in segment profit |
1 | — | (5 | ) | (35 | ) | (39 | ) | (5 | ) | (16 | ) | (19 | ) | 8 | (32 | ) | |||||||||||||||||||||||
Adjusted segment profit |
$ | 255 | $ | 292 | $ | 342 | $ | 389 | $ | 1,278 | $ | 419 | $ | 345 | $ | 352 | $ | 426 | $ | 1,542 | ||||||||||||||||||||
| (a) | Amounts reported have been recast to reflect the impact of the November 2010 Piceance Acquisition. |
2
Williams Partners L.P.
(UNAUDITED)
(UNAUDITED)
| Full Year Forecasted 2011 | Full Year Forecasted 2012 | |||||||||||||||||||||||
| (Millions) | Low | Midpoint | High | Low | Midpoint | High | ||||||||||||||||||
| Reconciliation of Non-GAAP “Distributable Cash Flow attributable to partnership operations” to GAAP “Net income” | ||||||||||||||||||||||||
Net income |
$ | 1,015 | $ | 1,240 | $ | 1,465 | $ | 1,145 | $ | 1,410 | $ | 1,675 | ||||||||||||
Depreciation and amortization |
610 | 630 | 650 | 635 | 655 | 675 | ||||||||||||||||||
Other |
15 | 8 | — | — | — | — | ||||||||||||||||||
Maintenance capital expenditures |
(490 | ) | (513 | ) | (535 | ) | (380 | ) | (415 | ) | (450 | ) | ||||||||||||
Distributable cash flow attributable to partnership operations |
$ | 1,150 | $ | 1,365 | $ | 1,580 | $ | 1,400 | $ | 1,650 | $ | 1,900 | ||||||||||||
Total cash to be distributed * |
$ | 1,146 | $ | 1,175 | $ | 1,205 | $ | 1,289 | $ | 1,369 | $ | 1,449 | ||||||||||||
Coverage ratios: |
||||||||||||||||||||||||
Distributable cash flow attributable to partnership operations divided by
Total cash distributed * |
1.0 | 1.2 | 1.3 | 1.1 | 1.2 | 1.3 | ||||||||||||||||||
Net income divided by Total cash distributed * |
0.9 | 1.1 | 1.2 | 0.9 | 1.0 | 1.2 | ||||||||||||||||||
| * | Distributions reflect growth rates of 6-10%. |
Reconciliation of Non-GAAP “Adjusted Segment Profit” to GAAP “Segment Profit”
Segment Profit: |
||||||||||||||||||||||||
Midstream |
$ | 900 | $ | 1,100 | $ | 1,300 | $ | 1,025 | $ | 1,275 | $ | 1,525 | ||||||||||||
Gas Pipeline |
650 | 670 | 690 | 650 | 670 | 690 | ||||||||||||||||||
Total Segment Profit |
1,550 | 1,770 | 1,990 | 1,675 | 1,945 | 2,215 | ||||||||||||||||||
Adjustments |
— | — | — | — | — | — | ||||||||||||||||||
Adjusted segment profit |
$ | 1,550 | $ | 1,770 | $ | 1,990 | $ | 1,675 | $ | 1,945 | $ | 2,215 | ||||||||||||
3
Consolidated Statement of Income
(UNAUDITED)
| 2009* | 2010 | |||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per-share amounts) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr* | 2nd Qtr* | 3rd Qtr* | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||||||||||||||
Gas Pipeline |
$ | 401 | $ | 421 | $ | 380 | $ | 389 | $ | 1,591 | $ | 407 | $ | 380 | $ | 409 | $ | 409 | $ | 1,605 | ||||||||||||||||||||
Midstream Gas & Liquids |
581 | 689 | 822 | 926 | 3,018 | 1,083 | 1,020 | 919 | 1,087 | 4,109 | ||||||||||||||||||||||||||||||
Intercompany eliminations |
(2 | ) | (3 | ) | (1 | ) | (1 | ) | (7 | ) | — | — | (1 | ) | 2 | 1 | ||||||||||||||||||||||||
Total revenues |
980 | 1,107 | 1,201 | 1,314 | 4,602 | 1,490 | 1,400 | 1,327 | 1,498 | 5,715 | ||||||||||||||||||||||||||||||
Segment costs and expenses: |
||||||||||||||||||||||||||||||||||||||||
Costs and operating expenses |
661 | 754 | 810 | 875 | 3,100 | 1,033 | 1,002 | 923 | 1,026 | 3,984 | ||||||||||||||||||||||||||||||
Selling, general and administrative expenses |
72 | 74 | 75 | 79 | 300 | 62 | 70 | 70 | 79 | 281 | ||||||||||||||||||||||||||||||
Other (income) expense — net |
(2 | ) | 3 | (1 | ) | (34 | ) | (34 | ) | (3 | ) | (6 | ) | (13 | ) | 7 | (15 | ) | ||||||||||||||||||||||
Segment costs and expenses |
731 | 831 | 884 | 920 | 3,366 | 1,092 | 1,066 | 980 | 1,112 | 4,250 | ||||||||||||||||||||||||||||||
General corporate expenses |
26 | 26 | 27 | 30 | 109 | 35 | 28 | 30 | 32 | 125 | ||||||||||||||||||||||||||||||
Operating income: |
||||||||||||||||||||||||||||||||||||||||
Gas Pipeline |
164 | 147 | 138 | 151 | 600 | 160 | 138 | 151 | 150 | 599 | ||||||||||||||||||||||||||||||
Midstream Gas & Liquids |
85 | 129 | 179 | 243 | 636 | 238 | 196 | 196 | 236 | 866 | ||||||||||||||||||||||||||||||
General corporate expenses |
(26 | ) | (26 | ) | (27 | ) | (30 | ) | (109 | ) | (35 | ) | (28 | ) | (30 | ) | (32 | ) | (125 | ) | ||||||||||||||||||||
Total operating income |
223 | 250 | 290 | 364 | 1,127 | 363 | 306 | 317 | 354 | 1,340 | ||||||||||||||||||||||||||||||
Equity earnings |
5 | 16 | 30 | 30 | 81 | 26 | 27 | 24 | 32 | 109 | ||||||||||||||||||||||||||||||
Interest accrued — third party |
(53 | ) | (51 | ) | (51 | ) | (52 | ) | (207 | ) | (81 | ) | (101 | ) | (103 | ) | (107 | ) | (392 | ) | ||||||||||||||||||||
Interest accrued — affiliate |
(14 | ) | (16 | ) | (9 | ) | (13 | ) | (52 | ) | — | (1 | ) | — | — | (1 | ) | |||||||||||||||||||||||
Interest capitalized |
16 | 17 | 10 | 15 | 58 | 12 | 7 | 7 | 3 | 29 | ||||||||||||||||||||||||||||||
Interest income |
5 | 6 | 5 | 4 | 20 | 3 | — | — | 1 | 4 | ||||||||||||||||||||||||||||||
Other income (expense) — net |
3 | 2 | 4 | 4 | 13 | (1 | ) | 2 | 9 | 4 | 14 | |||||||||||||||||||||||||||||
Income before income taxes |
185 | 224 | 279 | 352 | 1,040 | 322 | 240 | 254 | 287 | 1,103 | ||||||||||||||||||||||||||||||
Provision for income taxes |
1 | 2 | 1 | — | 4 | — | — | 1 | 1 | 2 | ||||||||||||||||||||||||||||||
Net income |
184 | 222 | 278 | 352 | 1,036 | 322 | 240 | 253 | 286 | 1,101 | ||||||||||||||||||||||||||||||
Less: Net income attributable to noncontrolling interests |
7 | 6 | 7 | 7 | 27 | 6 | 5 | 5 | — | 16 | ||||||||||||||||||||||||||||||
Net income attributable to controlling interests |
$ | 177 | $ | 216 | $ | 271 | $ | 345 | $ | 1,009 | $ | 316 | $ | 235 | $ | 248 | $ | 286 | $ | 1,085 | ||||||||||||||||||||
Allocation of net income for calculation of earnings per common unit: |
||||||||||||||||||||||||||||||||||||||||
Net income attributable to controlling interests |
$ | 177 | $ | 216 | $ | 271 | $ | 345 | $ | 1,009 | $ | 316 | $ | 235 | $ | 248 | $ | 286 | $ | 1,085 | ||||||||||||||||||||
Allocation of net income to general partner and Class C units |
158 | 190 | 216 | 293 | 857 | 275 | 84 | 85 | 73 | 517 | ||||||||||||||||||||||||||||||
Allocation of net income to common units |
$ | 19 | $ | 26 | $ | 55 | $ | 52 | $ | 152 | $ | 41 | $ | 151 | $ | 163 | $ | 213 | $ | 568 | ||||||||||||||||||||
Net income, per common unit |
$ | 0.36 | $ | 0.48 | $ | 1.04 | $ | 0.99 | $ | 2.88 | $ | 0.61 | $ | 0.66 | $ | 0.63 | $ | 0.76 | $ | 2.66 | ||||||||||||||||||||
Weighted-average number of common units outstanding** |
52,777 | 52,777 | 52,777 | 52,777 | 52,777 | 52,777 | 255,777 | 260,508 | 282,058 | 213,539 | ||||||||||||||||||||||||||||||
| * | Amounts reported have been recast to reflect the impact of the November 2010 Piceance Acquisition. | |
| ** | The calculation of second quarter and year-to-date 2010 weighted average common units consider Class C units as common units for the entire second quarter. Units presented in thousands. |
4
Gas Pipeline
(UNAUDITED)
| 2009 | 2010 | |||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||||||||||||||
Northwest Pipeline |
$ | 112 | $ | 107 | $ | 107 | $ | 108 | $ | 434 | $ | 106 | $ | 103 | $ | 103 | $ | 110 | $ | 422 | ||||||||||||||||||||
Transcontinental Gas Pipe Line |
290 | 312 | 274 | 282 | 1,158 | 300 | 278 | 305 | 299 | 1,182 | ||||||||||||||||||||||||||||||
Other |
(1 | ) | 2 | (1 | ) | (1 | ) | (1 | ) | 1 | (1 | ) | 1 | — | 1 | |||||||||||||||||||||||||
Total revenues |
401 | 421 | 380 | 389 | 1,591 | 407 | 380 | 409 | 409 | 1,605 | ||||||||||||||||||||||||||||||
Segment costs and expenses: |
||||||||||||||||||||||||||||||||||||||||
Costs and operating expenses |
196 | 231 | 197 | 191 | 815 | 212 | 199 | 216 | 212 | 839 | ||||||||||||||||||||||||||||||
Selling, general and administrative expenses |
42 | 39 | 41 | 42 | 164 | 33 | 39 | 37 | 42 | 151 | ||||||||||||||||||||||||||||||
Other (income) expense — net |
(1 | ) | 4 | 4 | 5 | 12 | 2 | 4 | 5 | 5 | 16 | |||||||||||||||||||||||||||||
Total segment costs and expenses |
237 | 274 | 242 | 238 | 991 | 247 | 242 | 258 | 259 | 1,006 | ||||||||||||||||||||||||||||||
Equity earnings |
8 | 8 | 10 | 9 | 35 | 9 | 10 | 10 | 9 | 38 | ||||||||||||||||||||||||||||||
Reported segment profit: |
||||||||||||||||||||||||||||||||||||||||
Northwest Pipeline |
58 | 51 | 55 | 56 | 220 | 54 | 50 | 53 | 55 | 212 | ||||||||||||||||||||||||||||||
Transcontinental Gas Pipe Line |
107 | 98 | 88 | 96 | 389 | 108 | 91 | 100 | 95 | 394 | ||||||||||||||||||||||||||||||
Other |
7 | 6 | 5 | 8 | 26 | 7 | 7 | 8 | 9 | 31 | ||||||||||||||||||||||||||||||
Total reported segment profit |
172 | 155 | 148 | 160 | 635 | 169 | 148 | 161 | 159 | 637 | ||||||||||||||||||||||||||||||
Adjustments: |
||||||||||||||||||||||||||||||||||||||||
Northwest Pipeline |
— | — | — | 1 | 1 | — | (1 | ) | — | — | (1 | ) | ||||||||||||||||||||||||||||
Transcontinental Gas Pipe Line |
— | — | — | 3 | 3 | (5 | ) | (4 | ) | — | 5 | (4 | ) | |||||||||||||||||||||||||||
Total adjustments |
— | — | — | 4 | 4 | (5 | ) | (5 | ) | — | 5 | (5 | ) | |||||||||||||||||||||||||||
Adjusted segment profit: |
||||||||||||||||||||||||||||||||||||||||
Northwest Pipeline |
58 | 51 | 55 | 57 | 221 | 54 | 49 | 53 | 55 | 211 | ||||||||||||||||||||||||||||||
Transcontinental Gas Pipe Line |
107 | 98 | 88 | 99 | 392 | 103 | 87 | 100 | 100 | 390 | ||||||||||||||||||||||||||||||
Other |
7 | 6 | 5 | 8 | 26 | 7 | 7 | 8 | 9 | 31 | ||||||||||||||||||||||||||||||
Total adjusted segment profit |
$ | 172 | $ | 155 | $ | 148 | $ | 164 | $ | 639 | $ | 164 | $ | 143 | $ | 161 | $ | 164 | $ | 632 | ||||||||||||||||||||
Operating statistics |
||||||||||||||||||||||||||||||||||||||||
Northwest Pipeline |
||||||||||||||||||||||||||||||||||||||||
Throughput (TBtu) |
224.0 | 172.9 | 165.7 | 205.9 | 768.5 | 179.4 | 156.5 | 152.7 | 183.8 | 672.4 | ||||||||||||||||||||||||||||||
Avg. daily transportation volumes (TBtu) |
2.5 | 1.9 | 1.8 | 2.2 | 2.1 | 2.0 | 1.7 | 1.7 | 2.0 | 1.8 | ||||||||||||||||||||||||||||||
Avg. daily firm reserved capacity (TBtu) |
2.6 | 2.6 | 2.6 | 2.7 | 2.7 | 2.8 | 2.8 | 2.8 | 2.8 | 2.8 | ||||||||||||||||||||||||||||||
Transcontinental Gas Pipe Line |
||||||||||||||||||||||||||||||||||||||||
Throughput (TBtu) |
549.7 | 420.8 | 443.4 | 487.5 | 1,901.4 | 586.1 | 459.6 | 517.1 | 593.5 | 2,156.3 | ||||||||||||||||||||||||||||||
Avg. daily transportation volumes (TBtu) |
6.1 | 4.6 | 4.8 | 5.3 | 5.2 | 6.5 | 5.1 | 5.6 | 6.5 | 5.9 | ||||||||||||||||||||||||||||||
Avg. daily firm reserved capacity (TBtu) |
7.0 | 6.6 | 6.7 | 6.9 | 6.8 | 7.0 | 6.9 | 7.1 | 7.6 | 7.2 | ||||||||||||||||||||||||||||||
5
Midstream Gas & Liquids
(UNAUDITED)
(UNAUDITED)
| 2009* | 2010 | |||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr* | 2nd Qtr* | 3rd Qtr* | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||||||||||||||
Gathering & processing |
$ | 130 | $ | 132 | $ | 141 | $ | 150 | $ | 553 | $ | 149 | $ | 152 | $ | 155 | $ | 163 | $ | 619 | ||||||||||||||||||||
NGL sales from gas processing |
150 | 172 | 217 | 268 | 807 | 338 | 272 | 229 | 298 | 1,137 | ||||||||||||||||||||||||||||||
Production handling and transportation |
31 | 31 | 33 | 28 | 123 | 29 | 26 | 26 | 26 | 107 | ||||||||||||||||||||||||||||||
Marketing sales |
449 | 558 | 720 | 829 | 2,556 | 999 | 897 | 796 | 1,025 | 3,717 | ||||||||||||||||||||||||||||||
Other revenues |
37 | 37 | 35 | 39 | 148 | 43 | 42 | 38 | 40 | 163 | ||||||||||||||||||||||||||||||
| 797 | 930 | 1,146 | 1,314 | 4,187 | 1,558 | 1,389 | 1,244 | 1,552 | 5,743 | |||||||||||||||||||||||||||||||
Intrasegment eliminations |
(216 | ) | (241 | ) | (324 | ) | (388 | ) | (1,169 | ) | (475 | ) | (369 | ) | (325 | ) | (465 | ) | (1,634 | ) | ||||||||||||||||||||
Total revenues |
581 | 689 | 822 | 926 | 3,018 | 1,083 | 1,020 | 919 | 1,087 | 4,109 | ||||||||||||||||||||||||||||||
Segment costs and expenses: |
||||||||||||||||||||||||||||||||||||||||
NGL cost of goods sold |
92 | 69 | 75 | 99 | 335 | 145 | 106 | 93 | 98 | 442 | ||||||||||||||||||||||||||||||
Marketing cost of goods sold |
444 | 542 | 714 | 811 | 2,511 | 997 | 902 | 792 | 1,006 | 3,697 | ||||||||||||||||||||||||||||||
Other cost of goods sold |
7 | 5 | 5 | 9 | 26 | 10 | 7 | 7 | 6 | 30 | ||||||||||||||||||||||||||||||
Operating costs |
142 | 150 | 142 | 154 | 588 | 144 | 157 | 141 | 166 | 608 | ||||||||||||||||||||||||||||||
Other |
||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses |
30 | 35 | 34 | 38 | 137 | 29 | 31 | 32 | 38 | 130 | ||||||||||||||||||||||||||||||
Other (income) expense — net |
(3 | ) | — | (3 | ) | (40 | ) | (46 | ) | (5 | ) | (10 | ) | (17 | ) | 2 | (30 | ) | ||||||||||||||||||||||
Intrasegment eliminations |
(216 | ) | (241 | ) | (324 | ) | (388 | ) | (1,169 | ) | (475 | ) | (369 | ) | (325 | ) | (465 | ) | (1,634 | ) | ||||||||||||||||||||
Total segment costs and expenses |
496 | 560 | 643 | 683 | 2,382 | 845 | 824 | 723 | 851 | 3,243 | ||||||||||||||||||||||||||||||
Equity earnings |
(3 | ) | 8 | 20 | 21 | 46 | 17 | 17 | 14 | 23 | 71 | |||||||||||||||||||||||||||||
Reported segment profit |
82 | 137 | 199 | 264 | 682 | 255 | 213 | 210 | 259 | 937 | ||||||||||||||||||||||||||||||
Adjustments |
1 | — | (5 | ) | (39 | ) | (43 | ) | — | (11 | ) | (19 | ) | 3 | (27 | ) | ||||||||||||||||||||||||
Adjusted segment profit |
$ | 83 | $ | 137 | $ | 194 | $ | 225 | $ | 639 | $ | 255 | $ | 202 | $ | 191 | $ | 262 | $ | 910 | ||||||||||||||||||||
Operating statistics |
||||||||||||||||||||||||||||||||||||||||
Gathering and Processing |
||||||||||||||||||||||||||||||||||||||||
Gathering volumes (TBtu) |
342 | 345 | 350 | 333 | 1,370 | 312 | 312 | 317 | 321 | 1,262 | ||||||||||||||||||||||||||||||
Plant inlet natural gas volumes (Tbtu) |
318 | 308 | 352 | 364 | 1,342 | 360 | 352 | 343 | 369 | 1,424 | ||||||||||||||||||||||||||||||
NGL equity sales (million gallons) ** |
292 | 297 | 317 | 314 | 1,220 | 332 | 302 | 271 | 317 | 1,222 | ||||||||||||||||||||||||||||||
NGL margin ($/gallon) |
$ | 0.20 | $ | 0.35 | $ | 0.45 | $ | 0.54 | $ | 0.39 | $ | 0.58 | $ | 0.55 | $ | 0.50 | $ | 0.63 | $ | 0.57 | ||||||||||||||||||||
NGL production (million gallons) ** |
579 | 590 | 657 | 683 | 2,509 | 671 | 653 | 616 | 722 | 2,662 | ||||||||||||||||||||||||||||||
Discovery Producer Services L.L.C. (equity investment) - 100% |
||||||||||||||||||||||||||||||||||||||||
NGL equity sales (million gallons) |
12 | 25 | 30 | 27 | 94 | 30 | 28 | 23 | 24 | 105 | ||||||||||||||||||||||||||||||
NGL production (million gallons) |
30 | 56 | 79 | 85 | 250 | 89 | 84 | 81 | 91 | 345 | ||||||||||||||||||||||||||||||
Laurel Mountain Midstream, LLC (equity investment) - 100% |
||||||||||||||||||||||||||||||||||||||||
Gathering volumes (Tbtu) |
— | 3 | 9 | 10 | 22 | 9 | 10 | 11 | 12 | 42 | ||||||||||||||||||||||||||||||
| * | Amounts reported have been recast to reflect the impact of the November 2010 Piceance Acquisition. | |
| ** | Excludes volumes associated with partially owned assets that are not consolidated for financial reporting purposes. |
6
Capital Expenditures and Investments
(UNAUDITED)
(UNAUDITED)
| 2009* | 2010 | |||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr* | 2nd Qtr* | 3rd Qtr* | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Capital expenditures: |
||||||||||||||||||||||||||||||||||||||||
Gas Pipeline: |
||||||||||||||||||||||||||||||||||||||||
Northwest Pipeline |
$ | 9 | $ | 36 | $ | 58 | $ | 50 | $ | 153 | $ | 10 | $ | 24 | $ | 51 | $ | 35 | $ | 120 | ||||||||||||||||||||
Transcontinental Gas Pipe Line |
22 | 45 | 94 | 142 | 303 | 56 | 83 | 98 | 145 | 382 | ||||||||||||||||||||||||||||||
Total |
31 | 81 | 152 | 192 | 456 | 66 | 107 | 149 | 180 | 502 | ||||||||||||||||||||||||||||||
Midstream Gas & Liquids |
137 | 140 | 100 | 74 | 451 | 54 | 114 | 97 | 70 | 335 | ||||||||||||||||||||||||||||||
Total** |
$ | 168 | $ | 221 | $ | 252 | $ | 266 | $ | 907 | $ | 120 | $ | 221 | $ | 246 | $ | 250 | $ | 837 | ||||||||||||||||||||
Purchase of businesses: |
||||||||||||||||||||||||||||||||||||||||
Gas Pipeline |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||
Midstream Gas & Liquids |
— | — | — | — | — | — | — | — | 608 | 608 | ||||||||||||||||||||||||||||||
Total |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 608 | $ | 608 | ||||||||||||||||||||
Purchase of investments: |
||||||||||||||||||||||||||||||||||||||||
Gas Pipeline |
$ | 5 | $ | 3 | $ | 1 | $ | 2 | $ | 11 | $ | 1 | $ | — | $ | 1 | $ | 3 | $ | 5 | ||||||||||||||||||||
Midstream Gas & Liquids |
3 | 112 | (1 | ) | 6 | 120 | 8 | 6 | 434 | 23 | 471 | |||||||||||||||||||||||||||||
Total |
$ | 8 | $ | 115 | $ | — | $ | 8 | $ | 131 | $ | 9 | $ | 6 | $ | 435 | $ | 26 | $ | 476 | ||||||||||||||||||||
Summary: |
||||||||||||||||||||||||||||||||||||||||
Gas Pipeline |
$ | 36 | $ | 84 | $ | 153 | $ | 194 | $ | 467 | $ | 67 | $ | 107 | $ | 150 | $ | 183 | $ | 507 | ||||||||||||||||||||
Midstream Gas & Liquids |
140 | 252 | 99 | 80 | 571 | 62 | 120 | 531 | 701 | 1,414 | ||||||||||||||||||||||||||||||
Total |
$ | 176 | $ | 336 | $ | 252 | $ | 274 | $ | 1,038 | $ | 129 | $ | 227 | $ | 681 | $ | 884 | $ | 1,921 | ||||||||||||||||||||
Cumulative summary: |
||||||||||||||||||||||||||||||||||||||||
Gas Pipeline |
$ | 36 | $ | 120 | $ | 273 | $ | 467 | $ | 467 | $ | 67 | $ | 174 | $ | 324 | $ | 507 | $ | 507 | ||||||||||||||||||||
Midstream Gas & Liquids |
140 | 392 | 491 | 571 | 571 | 62 | 182 | 713 | 1,414 | 1,414 | ||||||||||||||||||||||||||||||
Total |
$ | 176 | $ | 512 | $ | 764 | $ | 1,038 | $ | 1,038 | $ | 129 | $ | 356 | $ | 1,037 | $ | 1,921 | $ | 1,921 | ||||||||||||||||||||
Capital expenditures incurred and purchase of investments |
||||||||||||||||||||||||||||||||||||||||
Increases to property, plant, and equipment |
$ | 164 | $ | 206 | $ | 309 | $ | 297 | $ | 976 | $ | 103 | $ | 180 | $ | 236 | $ | 240 | $ | 759 | ||||||||||||||||||||
Purchase of businesses |
— | — | — | — | — | — | — | — | 608 | 608 | ||||||||||||||||||||||||||||||
Purchase of investments |
8 | 115 | — | 8 | 131 | 9 | 6 | 435 | 26 | 476 | ||||||||||||||||||||||||||||||
Total |
$ | 172 | $ | 321 | $ | 309 | $ | 305 | $ | 1,107 | $ | 112 | $ | 186 | $ | 671 | $ | 874 | $ | 1,843 | ||||||||||||||||||||
** Increases to property, plant, and equipment |
$ | 164 | $ | 206 | $ | 309 | $ | 297 | $ | 976 | $ | 103 | $ | 180 | $ | 236 | $ | 240 | $ | 759 | ||||||||||||||||||||
Changes in related accounts payable and accrued
liabilities |
4 | 15 | (57 | ) | (31 | ) | (69 | ) | 17 | 40 | 11 | 10 | 78 | |||||||||||||||||||||||||||
Capital expenditures |
$ | 168 | $ | 221 | $ | 252 | $ | 266 | $ | 907 | $ | 120 | $ | 220 | $ | 247 | $ | 250 | $ | 837 | ||||||||||||||||||||
| * | Amounts reported have been recast to reflect the impact of the November 2010 Piceance Acquisition. |
7
Depreciation and Amortization
(UNAUDITED)
(UNAUDITED)
| 2009* | 2010 | |||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr* | 2nd Qtr* | 3rd Qtr* | 4th Qtr | Year | ||||||||||||||||||||||||||||||
Depreciation and amortization: |
||||||||||||||||||||||||||||||||||||||||
Gas Pipeline: |
||||||||||||||||||||||||||||||||||||||||
Northwest Pipeline |
$ | 21 | $ | 21 | $ | 22 | $ | 22 | $ | 86 | $ | 22 | $ | 22 | $ | 22 | 22 | $ | 88 | |||||||||||||||||||||
Transcontinental Gas Pipe Line |
61 | 61 | 62 | 64 | 248 | 63 | 62 | 62 | 65 | 252 | ||||||||||||||||||||||||||||||
Other |
— | 1 | (1 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Total |
82 | 83 | 83 | 86 | 334 | 85 | 84 | 84 | 87 | 340 | ||||||||||||||||||||||||||||||
Midstream Gas & Liquids |
53 | 53 | 56 | 57 | 219 | 55 | 56 | 56 | 61 | 228 | ||||||||||||||||||||||||||||||
Total |
$ | 135 | $ | 136 | $ | 139 | $ | 143 | $ | 553 | $ | 140 | $ | 140 | $ | 140 | $ | 148 | $ | 568 | ||||||||||||||||||||
| * | Amounts reported have been recast to reflect the impact of the November 2010 Piceance Acquisition. |
8