Exhibit 99.1

DATE: April 30, 2014

 

MEDIA CONTACT:		INVESTOR CONTACTS:
Tom Droege (918) 573-4034		John Porter (918) 573-0797		Sharna Reingold (918) 573-2078

 

 

Williams Partners Reports First-Quarter 2014 Financial Results

• First-Quarter 2014 Net Income Is $352 Million, $0.36 per Common Unit

• Distributable Cash Flow (DCF) From Partnership’s Operations Up 17% from Year Ago

• Fee-based Revenue Up $63 Million or 9% vs. First-Quarter 2013

• Continue to Expect More Than 50% Growth in DCF for 2015 vs. 2013

• Partnership Reaffirms Guidance for LP per Unit Distribution Growth of Approximately 6% in each of 2014 and 2015

• Williams Partners Analyst Day Set for May 14; Management to Present on Businesses and Provide 2016 Guidance

 

Quarterly Summary Financial Information		1Q
Amounts in millions, except per-unit and coverage ratio amounts. All income amounts attributable to Williams Partners L.P.		2014				2013
(Unaudited)
Net income		$	352			$	344
Net income per common L.P. unit		$	0.36			$	0.50
Distributable cash flow (DCF) (1)			605				525
Less: Pre-partnership DCF (2)			(23	)			(28	)
DCF attributable to partnership operations		$	582			$	497
Cash distribution coverage ratio (1)			1.03x				1.05x
(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 Canadian asset dropdown (acquired February 2014) for periods prior to acquisition by the partnership.

TULSA, Okla. – Williams Partners L.P. (NYSE: WPZ) announced unaudited first-quarter 2014 net income of $352 million, or $0.36 per common limited-partner unit, compared with net income of $344 million, or $0.50 per common limited-partner unit for first-quarter 2013. Prior-period results throughout this release have been recast to include the results of the assets acquired in the Canadian asset dropdown in February 2014.

 

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The increase in net income during first-quarter 2014 is primarily due to $63 million, or 9 percent, increase in fee-based revenues, partially offset by $38 million, or 26 percent, lower natural gas liquid (NGL) margins and $18 million higher operating costs (primarily depreciation) associated with ongoing growth in our Northeast G&P segment.

Distributable Cash Flow & Distributions

For first-quarter 2014, Williams Partners generated $582 million in DCF attributable to partnership operations, compared with $497 million in DCF attributable to partnership operations in first-quarter 2013.

The $85 million increase in DCF for the quarter was driven by $63 million, or 9 percent, growth in fee-based revenues, as well as $63 million in higher Geismar results (including the benefit of expected business interruption insurance recoveries and planned plant expansion), partially offset by $38 million lower NGL margins and other changes.

Williams Partners recently announced that it increased its quarterly cash distribution to unitholders to $0.9045 per unit, a 6.7-percent increase over the year-ago amount.

CEO Perspective

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

“Williams Partners’ performance was strong in the first quarter. Our operations performed well during the harsh winter, as we continued our trend of posting significant quarterly increases in fee-based revenues.

“From an execution perspective, we completed or made significant progress on several large-scale projects in the first quarter. We added a second fractionator to our Moundsville, West Virginia facility, substantially completed the Keathley Canyon deepwater pipeline and prepared Gulfstar One for commissioning. Additionally, the Geismar olefins plant is expected to begin the startup of its expanded production in June.

“We’re excited about the accelerating pace of expansion projects at Transco, including Atlantic Sunrise, Dalton Lateral and our newly announced Gulf Trace project. The Atlantic Sunrise and Gulf Trace projects will serve as important infrastructure for future LNG export facilities at Cove Point and Sabine Pass.

“Our strong performance, steadfast execution and constantly growing business opportunities, give us confidence in our continued expectation of 50 percent DCF growth in 2015 versus 2013 with minimal equity issuances in 2014 and none planned for 2015. Growing cash flows are shifting financing toward debt while we continue to maintain investment grade credit metrics.”

 

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Business Segment Performance

 

		1Q
		Segment Profit (Loss)*								Segment Profit + DD&A *
Amounts in millions		2014				2013				2014				2013
Northeast G&P		$	6			($	9	)		$	45			$	20
Atlantic-Gulf			165				159				259				252
West			165				186				223				247
NGL & Petchem Services			167				158				184				171
Total		$	503			$	494			$	711			$	690
Adjustments			60				(6	)			60				(6	)
Total		$	563			$	488			$	771			$	684
*  Schedules reconciling segment profit to adjusted segment profit and adjusted segment profit + DD&A are attached to this news release.

 

Williams Partners		2013																		2014
Key Operational Metrics		1Q				2Q				3Q				4Q						1Q				1Q Change
																								Year-over-year				Sequential
Fee-based Revenues (millions)		$	685			$	705			$	721			$	754					$	748				9	%			-1	%
NGL Margins (millions)		$	144			$	117			$	131			$	127					$	106				-26	%			-17	%
Ethane Equity sales (million gallons)			23				43				57				24						33				43	%			38	%
Per-Unit Ethane NGL Margins ($/gallon)		$	0.03			$	0.02			-$	0.01			$	0.02					$	0.20				567	%			900	%
Non-Ethane Equity sales (million gallons)			163				157				153				134						113				-31	%			-16	%
Per-Unit Non-Ethane NGL Margins ($/gallon)		$	0.87			$	0.75			$	0.85			$	0.94					$	0.88				1	%			-6	%
Olefin Margins (millions)		$	150			$	117			$	23			$	12					$	28				-81	%			133	%
Geismar ethylene sales volumes (millions of lbs.)			246				211				N/A				N/A						N/A				N/A				N/A
Geismar ethylene margin ($/pound)		$	0.37			$	0.33				N/A				N/A						N/A				N/A				N/A

Northeast G&P

Northeast G&P includes the partnership’s midstream gathering and processing business in the Marcellus and Utica shale regions, including Susquehanna Supply Hub and Ohio Valley Midstream, as well as its 51-percent equity investment in Laurel Mountain Midstream, and its 58.4-percent equity investment in Caiman Energy II. Caiman Energy II owns a 50 percent interest in Blue Racer Midstream. This segment is in the early stages of developing large-scale energy infrastructure solutions for the Marcellus and Utica shale regions.

Northeast G&P reported segment profit of $6 million for first-quarter 2014, compared with segment loss of $9 million for first-quarter 2013.

The improved results are primarily due to a $36 million increase in fee revenues driven by 41 percent higher volumes and improved Laurel Mountain Midstream equity earnings. Results also reflect higher operating costs,

 

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primarily driven by increased depreciation associated with this rapidly growing segment.

Atlantic-Gulf

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

Atlantic-Gulf reported segment profit of $165 million for first-quarter 2014, compared with $159 million for first-quarter 2013.

Segment profit for the quarter increased primarily due to higher transportation fee revenues associated with expansion projects and new transportation rates effective in March 2013 for Transco, partially offset by lower NGL margins.

West

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

West reported segment profit of $165 million for first-quarter 2014, compared with $186 million for first-quarter 2013.

Lower segment profit for the quarter was due to $33 million lower NGL margins, primarily driven by the expiration of a natural gas processing contract in September 2013. This decrease was partially offset by $13 million lower operating expenses.

NGL & Petchem Services

NGL & Petchem Services includes an 83.3 percent interest in an olefins production facility in Geismar, La., along with a refinery grade propylene splitter and pipelines in the Gulf Coast region. Following the completion in February 2014 of the dropdown of Williams’ Canadian operations, this segment now includes midstream operations in Alberta Canada, including an oil sands offgas processing plant near Fort McMurray, 260 miles of NGL and olefins pipelines and an NGL/olefins fractionation facility and butylene/butane splitter facility at Redwater. This segment also includes the partnership’s energy commodities marketing business, an NGL fractionator and storage facilities near Conway, Kan. and a 50-percent interest in Overland Pass Pipeline.

NGL & Petchem Services reported segment profit of $167 million for first-quarter 2014, compared with $158 million for first-quarter 2013. First-quarter 2013 results have been recast to include the results of the assets

 

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acquired in the Canadian asset dropdown in February 2014.

Segment profit for the quarter increased $9 million, which primarily includes the net effect of insurance recoveries related to last year’s Geismar incident offsetting the impact of lost production.

Williams Partners – Operational Achievements

Northeast G&P

Williams Partners steadily increased the Northeast gathered volumes in first-quarter 2014 despite difficult winter weather conditions, reaching a new monthly average record of 2.3 billion cubic feet per day in the Utica-Marcellus. Average daily gathered volumes increased 38 percent in first quarter 2014 versus first quarter 2013. The Susquehanna Supply Hub grew volumes by 37 percent, Ohio Valley Midstream grew volumes by 63 percent and Laurel Mountain Midstream grew volumes by 29 percent during the quarter.

Williams Partners completed installation of additional fractionation capacity and is on track to install a de-ethanizer and stabilizer in the first half of 2014 at Ohio Valley Midstream to keep pace with producer demand.

Atlantic-Gulf

In the deepwater Gulf of Mexico, Williams Partners positioned the floating spar and completed the installation of the platform of Gulfstar One, the first-of-its-kind floating production spar, on schedule to start serving our deepwater customers in the third quarter of 2014. The turn-key product, which is part of the partnership’s offshore field development program, combines production handling services with export pipeline, oil and gas gathering and processing services.

In the Gulf of Mexico, Williams Partners completed installation of the 215-mile Keathley Canyon Connector 20-inch deepwater pipeline. The $460 million project, which includes a new shelf platform and an onshore methanol extraction plant, is due to be completed and ready to receive production within the fourth quarter of 2014.

Timely expansions to the Transco pipeline system drove record-breaking volume deliveries in areas stretching from Mississippi to New York City. Transco set a three-day delivery record Jan.6-8, 2014 when it delivered an average of 11.12 million dekatherms per day.

Williams Partners announced that the Atlantic Sunrise expansion project received binding commitments from nine shippers for 100 percent of the 1.7 million dekatherms of daily firm transportation capacity. The project includes 15-year shipper commitments from producers, local distribution companies and power generators. Williams Partners expects to bring Atlantic Sunrise into service in the second half of 2017, assuming all necessary regulatory approvals are received in a timely manner.

 

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West

The Willow Creek processing plant in the Piceance Basin achieved a new quarterly average daily inlet volume throughput record of 479 million cubic feet per day in the first quarter.

NGL & Petchem Services

Williams Partners continues to rebuild, turnaround and expand the Geismar Olefins plant, which is expected to begin startup in the latter half of June 2014. The expansion will increase the ethylene production capacity by 600 million pounds per year to a total capacity of 1.95 billion pounds per year. Williams Partners’ share of the total capacity is approximately 1.7 billion pounds per year.

Guidance

Williams Partners’ consolidated profitability and cash flow guidance ranges are unchanged from guidance issued on February 19, 2014.

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

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

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

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

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

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

Williams Partners has $500 million of combined business interruption and property damage insurance related to the Geismar incident (subject to deductibles and other limitations) that is expected to significantly mitigate the financial loss. Based on commodity pricing assumptions and property damage estimates, the partnership estimates approximately $430 million of cash recoveries from insurers related to business interruption losses and approximately $70 million related to property damage. In first quarter 2014, the insurers paid a second installment of $125 million and the total amount received to date is $175 million.

The assumed expanded plant restart date and repair cost estimate are subject to various uncertainties and risks

 

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

Capital expenditures included in guidance for 2014 and 2015 have been increased by approximately $250 million. The increase includes capital expenditures related to new projects, including the Gulf Trace project in the Atlantic-Gulf, timing shifts between years and other various adjustments.

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

 

Williams Partners Guidance		2014												2015
Amounts are in millions except coverage ratio.		Low				Mid				High				Low				Mid				High
DCF attributable to partnership ops. (1)		$	2,220			$	2,350			$	2,480			$	2,605			$	2,785			$	2,965
Total Cash Distribution (2)		$	2,351			$	2,419			$	2,487			$	2,632			$	2,714			$	2,796
Cash Distribution Coverage Ratio (1)			.94x				.97x				1.0x				.99x				1.03x				1.06x
Adjusted Segment Profit (1):		$	2,165			$	2,345			$	2,525			$	2,610			$	2,830			$	3,050
Adjusted Segment Profit + DD&A (1):		$	3,060			$	3,265			$	3,470			$	3,620			$	3,865			$	4,110
Capital Expenditures:
Maintenance		$	305			$	340			$	375			$	295			$	325			$	355
Growth			3,000				3,250				3,500				1,900				2,125				2,350
Total Capital Expenditures		$	3,305			$	3,590			$	3,875			$	2,195			$	2,450			$	2,705
(1)    Distributable Cash Flow, Cash Distribution Coverage Ratio, Adjusted Segment Profit and Adjusted Segment Profit + DD&A are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release.
(2)    The cash distributions in guidance are on an accrual basis and reflect an approximate annual growth rate in limited partner distributions of 6% for each of 2014 and 2015.

Williams, Williams Partners Analyst Day Set for May 14

Williams (NYSE: WMB) is scheduled to host its annual Analyst Day event May 14. During the event, Williams’ management will give in-depth presentations covering all of Williams’ and Williams Partners L.P.‘s (NYSE:WPZ) energy infrastructure businesses and provide 2016 guidance. The event is scheduled from 8:30 a.m. to approximately 2 p.m. EDT.

On the day of the event, www.williams.com and www.williamslp.com will feature presentation files for download along with a link to a live webcast. A replay of the Analyst Day webcast will be available for two weeks following the event.

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

Williams Partners’ first-quarter 2014 financial results will be posted shortly at www.williamslp.com. The

 

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information will include the data book and analyst package.

Williams and Williams Partners L.P. will host a joint Q&A live webcast on Thursday, May 1, at 9:30 a.m. EDT. A limited number of phone lines will be available at (888) 949-2165. International callers should dial (719) 325-4855. A link to the live first-quarter 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 company plans to file its first-quarter 2014 Form 10-Q with the Securities and Exchange Commission this week. Once filed, the document will be available on both the SEC and Williams websites.

Definitions of Non-GAAP Financial Measures

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

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

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

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

This news 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

 

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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, both onshore and offshore along the Gulf of Mexico, and Canada. Williams (NYSE: WMB) owns approximately 66 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.

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

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

 

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Amounts and nature of future capital expenditures;

 

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Expansion and growth of our business and operations;

 

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Financial condition and liquidity;

 

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Business strategy;

 

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Cash flow from operations or results of operations;

 

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The levels of cash distributions to unitholders;

 

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

 

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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:

 

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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;

 

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Availability of supplies, market demand and volatility of prices;

 

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Inflation, interest rates, fluctuation in foreign exchange 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);

 

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

 

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

 

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

 

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Development of alternative energy sources;

 

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The impact of operational and development hazards and unforeseen interruptions;

 

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

 

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

 

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Changes in maintenance and construction costs;

 

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Changes in the current geopolitical situation;

 

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

 

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

 

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

 

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

 

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Acts of terrorism, including cybersecurity threats and related disruptions;

 

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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 26, 2014, and each of our quarterly reports on Form 10-Q available from our offices or from our website at www.williamslp.com.

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Financial Highlights and Operating Statistics

(UNAUDITED)

Final

March 31, 2014

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Reconciliation of Non-GAAP Measures

(UNAUDITED)

 

 

		2013*																				2014
(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		$	344			$	272			$	289			$	218			$	1,123			$	352
Income attributable to noncontrolling interests			—				—				—				(3	)			(3	)			—
Depreciation and amortization			196				191				201				203				791				208
Non-cash amortization of debt issuance costs included in interest expense			3				4				4				3				14				4
Equity earnings from investments			(18	)			(35	)			(31	)			(20	)			(104	)			(23	)
Allocated reorganization-related costs			2				—				—				—				2				—
Loss related to Geismar Incident			—				6				4				4				14				—
Geismar Incident adjustment for insurance and timing			—				—				(35	)			118				83				54
Contingency (gain) loss			—				—				9				16				25				—
Net reimbursements from Williams under omnibus agreements			4				4				2				3				13				3
Maintenance capital expenditures			(44	)			(76	)			(79	)			(59	)			(258	)			(36	)
Distributable cash flow excluding equity investments			487				366				364				483				1,700				562
Plus: Equity investments cash distributions to Williams Partners L.P.			38				41				34				41				154				43
Distributable cash flow			525				407				398				524				1,854				605
Less: Pre-partnership Distributable cash flow			28				20				20				15				83				23
Distributable cash flow attributable to partnership operations		$	497			$	387			$	378			$	509			$	1,771			$	582
Total cash distributed		$	473			$	489			$	442			$	556			$	1,960			$	566
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash distributed			1.05				0.79				0.86				0.92				0.90				1.03
Net income divided by Total cash distributed			0.73				0.56				0.65				0.39				0.57				0.62

 

*	Recast due to the dropdown of the Canadian operations to Williams Partners in first quarter 2014.

 

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Reconciliation of GAAP “Segment Profit” to Non-GAAP “Adjusted Segment Profit” and “Adjusted Segment Profit + DD&A”

(UNAUDITED)

 

		2013*																				2014
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr
Segment profit (loss):
Northeast G&P		$	(9	)		$	12			$	(1	)		$	(26	)		$	(24	)		$	6
Atlantic-Gulf			159				152				137				166				614				165
West			186				162				207				186				741				165
NGL & Petchem Services			158				101				68				19				346				167
Total segment profit		$	494			$	427			$	411			$	345			$	1,677			$	503
Adjustments:
Northeast G&P
Share of impairments at equity method investee		$	—			$	—			$	—			$	7			$	7			$	—
Contingency loss			—				—				9				16				25				—
Loss related to compressor station fire			—				—				—				—				—				6
Total Northeast G&P adjustments			—				—				9				23				32				6
Atlantic-Gulf
Litigation settlement gain			(6	)			—				—				—				(6	)			—
Net loss (recovery) related to Eminence storage facility leak			—				(5	)			5				(2	)			(2	)			—
Total Atlantic-Gulf adjustments			(6	)			(5	)			5				(2	)			(8	)			—
NGL & Petchem Services
Loss related to Geismar Incident			—				6				4				4				14				—
Geismar Incident adjustment for insurance and timing			—				—				(35	)			118				83				54
Total NGL & Petchem Services adjustments			—				6				(31	)			122				97				54
Total adjustments included in segment profit		$	(6	)		$	1			$	(17	)		$	143			$	121			$	60
Adjusted segment profit (loss):
Northeast G&P		$	(9	)		$	12			$	8			$	(3	)		$	8			$	12
Atlantic-Gulf			153				147				142				164				606				165
West			186				162				207				186				741				165
NGL & Petchem Services			158				107				37				141				443				221
Total adjusted segment profit		$	488			$	428			$	394			$	488			$	1,798			$	563
Depreciation and amortization (DD&A):
Northeast G&P		$	29			$	32			$	33			$	38			$	132			$	39
Atlantic-Gulf			93				87				92				91				363				94
West			61				58				58				59				236				58
NGL & Petchem Services			13				14				18				15				60				17
Total depreciation and amortization		$	196			$	191			$	201			$	203			$	791			$	208
Adjusted segment profit (loss) + DD&A:
Northeast G&P		$	20			$	44			$	41			$	35			$	140			$	51
Atlantic-Gulf			246				234				234				255				969				259
West			247				220				265				245				977				223
NGL & Petchem Services			171				121				55				156				503				238
Total adjusted segment profit + DD&A		$	684			$	619			$	595			$	691			$	2,589			$	771

 

*	Recast due to the dropdown of the Canadian operations to Williams Partners in the first quarter of 2014.

 

Note:

Segment profit (loss) includes equity earnings (losses) and income (loss) from investments reported in other investing income (loss)—net in the Consolidated Statement of Comprehensive Income. Equity earnings (losses) result from investments accounted for under the equity method. Income (loss) from investments results from the management of certain equity investments.

 

2

---

Consolidated Statement of Income

(UNAUDITED)

 

		2013 *																				2014
(Dollars in millions, except per-unit amounts)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr
Revenues:
Service revenues		$	702			$	717			$	731			$	764			$	2,914			$	763
Product sales			1,104				1,046				887				884				3,921				930
Total revenues			1,806				1,763				1,618				1,648				6,835				1,693
Costs and expenses:
Product costs			790				801				710				726				3,027				769
Operating and maintenance expenses			257				289				265				269				1,080				248
Depreciation and amortization expenses			196				191				201				203				791				208
Selling, general, and administrative expenses			130				131				130				128				519				130
Net insurance recoveries—Geismar Incident			—				6				(45	)			13				(26	)			(119	)
Other (income) expense—net			1				(2	)			16				22				37				17
Total costs and expenses			1,374				1,416				1,277				1,361				5,428				1,253
Equity earnings (losses)			18				35				31				20				104				23
Income (loss) from investments			(1	)			(1	)			(1	)			—				(3	)			—
General corporate expenses			45				46				40				38				169				40
Total segment profit			494				427				411				345				1,677				503
Reclass equity earnings (losses)			(18	)			(35	)			(31	)			(20	)			(104	)			(23	)
Income (loss) from investments			1				1				1				—				3				—
Reclass general corporate expenses			(45	)			(46	)			(40	)			(38	)			(169	)			(40	)
Operating income			432				347				341				287				1,407				440
Equity earnings (losses)			18				35				31				20				104				23
Interest incurred			(118	)			(118	)			(119	)			(122	)			(477	)			(131	)
Interest capitalized			22				22				24				22				90				25
Other investing income (loss)—net			(1	)			—				—				—				(1	)			—
Other income (expense)—net			6				7				7				6				26				3
Income before income taxes			359				293				284				213				1,149				360
Provision (benefit) for income taxes			15				21				(5	)			(5	)			26				8
Net income			344				272				289				218				1,123				352
Less: Net income attributable to noncontrolling interests			—				1				1				1				3				—
Net income attributable to controlling interests			344				271				288				217				1,120				352
Allocation of net income for calculation of earnings per common unit:
Net income attributable to controlling interests			344				271				288				217				1,120				352
Allocation of net income to general partner			142				141				64				162				509				180
Allocation of net income to Class D units			—				—				—				—				—				14
Allocation of net income to common units			202				130				224				55				611				158
Net income per common unit		$	0.50			$	0.31			$	0.52			$	0.12			$	1.45			$	0.36
Weighted-average number of common units outstanding (thousands)			401,969				413,901				428,682				438,626				420,916				438,626
Cash distributions per common unit		$	0.8475			$	0.8625			$	0.8775			$	0.8925			$	3.480			$	0.9045

 

*	Recast due to the dropdown of the Canadian operations to Williams Partners in the first quarter of 2014.

Note:

The sum of net income per common unit for the quarters may not equal the total income per common unit for the year due to changes in the weighted-average number of common units outstanding.

 

3

---

Northeast G&P

(UNAUDITED)

 

		2013																				2014
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr
Revenues:
Fee revenues:
Gathering & processing		$	59			$	69			$	84			$	90			$	302			$	90
Production handling and transportation			1				3				2				4				10				3
Other fee revenues			3				6				8				6				23				6
Commodity-based revenues:
NGL sales from gas processing			1				—				3				2				6				2
Marketing sales			19				34				45				62				160				58
Other sales			—				1				(1	)			—				—				—
			83				113				141				164				501				159
Intrasegment eliminations			—				—				(1	)			1				—				—
Total revenues			83				113				140				165				501				159
Segment costs and expenses:
NGL cost of goods sold			—				—				(1	)			—				(1	)			1
Marketing cost of goods sold			20				33				46				62				161				57
Depreciation and amortization			29				32				33				38				132				39
Other segment costs and expenses			40				43				66				77				226				57
Intrasegment eliminations			—				—				(1	)			1				—				—
Total segment costs and expenses			89				108				143				178				518				154
Equity earnings (losses)			(3	)			7				2				(13	)			(7	)			1
Reported segment profit (loss)			(9	)			12				(1	)			(26	)			(24	)			6
Adjustments			—				—				9				23				32				6
Adjusted segment profit (loss)		$	(9	)		$	12			$	8			$	(3	)		$	8			$	12
Operating statistics
Gathering and Processing*
Gathering volumes (Tbtu)			127				142				157				180				606				179
Plant inlet natural gas volumes (Tbtu)			18				25				28				34				105				29
Non-ethane equity sales (million gallons)			1				1				3				2				7				2
NGL equity sales (million gallons)			1				1				3				2				7				2
Ethane production (million gallons)			—				1				1				1				3				1
Non-ethane production (million gallons)			21				32				39				44				136				38
NGL production (million gallons)			21				33				40				45				139				39
Laurel Mountain Midstream LLC (equity investment) - 100%
Gathering volumes (Tbtu)			27				29				32				36				124				34

 

*	Excludes volumes associated with partially owned assets that are not consolidated for financial reporting purposes.

 

4

---

Atlantic-Gulf

(UNAUDITED)

 

		2013																				2014
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr
Revenues:
Fee-based revenues:
Gathering & processing		$	19			$	19			$	15			$	17			$	70			$	16
Production handling and transportation			283				282				282				302				1,149				307
Other fee revenues			29				29				30				30				118				30
Commodity-based revenues:
NGL sales from gas processing			28				26				22				27				103				20
Marketing sales			176				186				167				175				704				171
Other sales			1				—				—				2				3				1
Tracked revenues:			52				59				46				43				200				53
			588				601				562				596				2,347				598
Intrasegment eliminations			1				1				1				(1	)			2				2
Total revenues			589				602				563				595				2,349				600
Segment costs and expenses:
NGL cost of goods sold			6				7				5				6				24				6
Marketing cost of goods sold			176				186				167				175				704				171
Depreciation and amortization expenses			93				87				92				91				363				94
Other segment costs and expenses			118				130				132				134				514				124
Tracked costs			52				59				46				43				200				53
Intrasegment eliminations			1				1				1				(1	)			2				2
Total segment costs and expenses			446				470				443				448				1,807				450
Equity earnings (losses)			16				20				17				19				72				15
Reported segment profit			159				152				137				166				614				165
Adjustments			(6	)			(5	)			5				(2	)			(8	)			—
Adjusted segment profit		$	153			$	147			$	142			$	164			$	606			$	165
Operating statistics
Gathering and Processing*
Gathering volumes (Tbtu)			39				36				31				31				137				28
Plant inlet natural gas volumes (Tbtu)			76				78				55				61				270				60
Ethane equity sales (million gallons)			8				6				7				7				28				2
Non-ethane equity sales (million gallons)			20				20				16				18				74				12
NGL equity sales (million gallons)			28				26				23				25				102				14
Ethane margin ($/gallon)		$	.16			$	.21			$	.11			$	.08			$	.14			$	.46
Non-ethane margin ($/gallon)		$	1.03			$	.89			$	1.03			$	1.09			$	1.01			$	1.10
NGL margin ($/gallon)		$	.79			$	.73			$	.75			$	.81			$	.77			$	1.02
Ethane production (million gallons)			61				61				42				47				211				45
Non-ethane production (million gallons)			85				91				68				73				317				71
NGL production (million gallons)			146				152				110				120				528				116
Discovery Producer Services LLC (equity investment) - 100%
NGL equity sales (million gallons)			19				18				6				6				49				10
NGL production (million gallons)			63				64				45				46				218				47
Transcontinental Gas Pipe Line
Throughput (Tbtu)			845.6				713.1				756.8				837.5				3,153.0				949.2
Avg. daily transportation volumes (Tbtu)			9.4				7.8				8.2				9.1				8.6				10.5
Avg. daily firm reserved capacity (Tbtu)			9.3				8.9				8.8				9.3				9.1				9.6

* Excludes volumes associated with partially owned assets that are not consolidated for financial reporting purposes.

 

5

---

West

(UNAUDITED)

 

		2013																				2014
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr
Revenues:
Fee-based revenues:
Gathering & processing		$	134			$	141			$	143			$	144			$	562			$	132
Production handling and transportation			116				110				114				118				458				116
Other fee revenues			9				9				8				7				33				8
Commodity-based revenues:
NGL sales from gas processing			142				137				151				128				558				103
Marketing sales			46				46				55				34				181				30
Other sales			10				7				8				8				33				12
Tracked revenues			—				1				—				1				2				—
			457				451				479				440				1,827				401
Intrasegment eliminations			—				—				(1	)			—				(1	)			—
Total revenues			457				451				478				440				1,826				401
Segment costs and expenses:
NGL cost of goods sold			44				51				54				40				189				38
Marketing cost of goods sold			46				46				55				33				180				30
Other cost of goods sold			4				2				2				3				11				4
Depreciation and amortization expenses			61				58				58				59				236				58
Other segment costs and expenses			116				131				103				118				468				106
Tracked costs			—				1				—				1				2				—
Intrasegment eliminations			—				—				(1	)			—				(1	)			—
Total segment costs and expenses			271				289				271				254				1,085				236
Reported segment profit			186				162				207				186				741				165
Adjustments			—				—				—				—				—				—
Adjusted segment profit		$	186			$	162			$	207			$	186			$	741			$	165
Operating statistics
Gathering and Processing
Gathering volumes (Tbtu)			240				250				254				244				988				229
Plant inlet natural gas volumes (Tbtu)			295				305				310				264				1,174				249
Ethane equity sales (million gallons)			15				37				51				12				115				4
Non-ethane equity sales (million gallons)			102				106				110				89				407				69
NGL equity sales (million gallons)			117				143				161				101				522				73
Ethane margin ($/gallon)		$	(0.03	)		$	(0.01	)		$	(0.02	)		$	(0.001	)		$	(0.02	)		$	0.12
Non-ethane margin ($/gallon)		$	0.96			$	0.81			$	0.89			$	0.99			$	0.91			$	0.94
NGL margin ($/gallon)		$	0.83			$	0.60			$	0.61			$	0.86			$	0.71			$	0.89
Ethane production (million gallons)			98				124				139				89				450				60
Non-ethane production (million gallons)			262				281				294				246				1,083				233
NGL production (million gallons)			360				405				433				335				1,533				293
Northwest Pipeline LLC
Throughput (Tbtu)			201.0				136.9				168.6				210.4				716.9				192.4
Avg. daily transportation volumes (Tbtu)			2.2				1.5				1.8				2.3				2.0				2.1
Avg. daily firm reserved capacity (Tbtu)			3.0				3.0				3.0				3.0				3.0				3.0

 

6

---

NGL & Petchem Services

(UNAUDITED)

 

		2013*																				2014
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr
Revenues:
Fee-based revenues:
Production handling and transportation		$	6			$	6			$	6			$	5			$	23			$	7
Other fee-based revenues			26				31				29				31				117				33
Commodity-based revenues:
NGL sales from gas processing			37				24				22				28				111				54
Olefin sales			269				228				67				29				593				79
Marketing sales			684				673				645				644				2,646				698
Other sales			15				11				11				9				46				11
			1,037				973				780				746				3,536				882
Intrasegment eliminations			(79	)			(80	)			(56	)			(54	)			(269	)			(77	)
Total revenues			958				893				724				692				3,267				805
Segment costs and expenses:
NGL cost of goods sold			14				12				9				12				47				28
Olefins cost of goods sold			119				111				44				17				291				51
Marketing cost of goods sold			679				678				630				638				2,625				684
Other cost of goods sold			13				10				10				7				40				12
Depreciation and amortization expenses			13				14				18				15				60				17
Other segment costs and expenses			46				55				13				52				166				(70	)
Intrasegment eliminations			(79	)			(80	)			(56	)			(54	)			(269	)			(77	)
Total segment costs and expenses			805				800				668				687				2,960				645
Equity earnings (losses)			5				8				12				14				39				7
Reported segment profit			158				101				68				19				346				167
Adjustments			—				6				(31	)			122				97				54
Adjusted segment profit		$	158			$	107			$	37			$	141			$	443			$	221
Operating statistics
Ethane equity sales (million gallons)			—				—				—				3				3				27
Non-ethane equity sales (million gallons)			40				29				25				26				120				30
NGL equity sales (million gallons)			40				29				25				29				123				57
Ethane production (million gallons)			—				—				—				7				7				29
Non-ethane production (million gallons)			36				35				24				18				113				30
NGL production (million gallons)			36				35				24				25				120				59
Petrochemical Services
Geismar ethylene sales volumes (million lbs)			246				211				10				—				467				—
Geismar ethylene margin ($/lb)		$	0.37			$	0.33			$	0.05			$	—			$	0.34			$	—
Canadian propylene sales volumes (millions lbs)			35				36				27				20				118				32
Canadian alky feedstock sales volumes (million gallons)			9				10				7				5				31				7
Overland Pass Pipeline Company LLC (equity investment)—100%
NGL Transportation volumes (Mbbls)			7,402				11,151				13,174				11,463				43,190				8,612

 

*	Recast due to the dropdown of the Canadian operations to Williams Partners in the first quarter of 2014.

 

7

---

Capital Expenditures and Investments

(UNAUDITED)

 

		2013																				2014
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr
Capital expenditures:
Northeast G&P		$	307			$	298			$	338			$	407			$	1,350			$	359
Atlantic-Gulf			174				276				290				247				987				180
West			63				58				55				35				211				22
NGL & Petchem Services**			158				148				249				200				755				161
Other			2				1				1				4				8				2
Total*		$	704			$	781			$	933			$	893			$	3,311			$	724
Purchase of businesses:
NGL & Petchem Services***		$	(25	)		$	—			$	—			$	—			$	(25	)		$	25
Purchase of investments:
Northeast G&P		$	72			$	37			$	123			$	1			$	233			$	163
Atlantic-Gulf			15				50				35				93				193				51
NGL & Petchem Services			6				2				4				1				13				1
Total		$	93			$	89			$	162			$	95			$	439			$	215
Summary:
Northeast G&P		$	379			$	335			$	461			$	408			$	1,583				522
Atlantic-Gulf			189				326				325				340				1,180				231
West			63				58				55				35				211				22
NGL & Petchem Services			139				150				253				201				743				187
Other			2				1				1				4				8				2
Total		$	772			$	870			$	1,095			$	988			$	3,725			$	964
Capital expenditures incurred and purchase of investments:
Increases to property, plant, and equipment		$	716			$	822			$	970			$	825			$	3,333				769
Purchase of businesses			(25	)			—				—				—				(25	)			25
Purchase of investments			93				89				162				95				439				215
Total		$	784			$	911			$	1,132			$	920			$	3,747			$	1,009
*Increases to property, plant, and equipment**		$	716			$	822			$	970			$	825			$	3,333				769
Changes in related accounts payable and accrued liabilities**			(12	)			(41	)			(37	)			68				(22	)			(45	)
Capital expenditures**		$	704			$	781			$	933			$	893			$	3,311			$	724

 

**	Recast due to the dropdown of the Canadian operations to Williams Partners in the first quarter of 2014.

***	The first quarter of 2013 relates to a working capital adjustment associated with the acquisition of the olefins business from a subsidiary of Williams and the first quarter of 2014 relates to the acquisition of certain Canadian operations from a subsidiary of Williams.

 

8

---

Williams Partners L.P.

 

		2014 Guidance				2015 Guidance
(Dollars in millions, except coverage ratios)		Midpoint				Midpoint
Reconciliation of Non-GAAP “Distributable Cash Flow” to GAAP “Net income”
Net income		$	1,918			$	2,085
Depreciation and amortization			920				1,035
Maintenance capital expenditures			(340	)			(325	)
Attributable to noncontrolling interests			(45	)			(105	)
Geismar Incident adjustments			(116	)			—
Other / Rounding			36				95
Distributable cash flow			2,373				2,785
Less: Pre-partnership Distributable cash flow			23				—
Distributable cash flow attributable to partnership operations		$	2,350			$	2,785
Total cash to be distributed		$	2,419			$	2,714
Coverage ratios:
Distributable cash flow divided by Total cash to be distributed			0.97				1.03
Net income divided by Total cash to be distributed			0.79				0.77
Reconciliation of Non-GAAP “Adjusted Segment Profit” and “Adjusted Segment Profit + DD&A” to GAAP “Segment Profit”
Segment profit:
Northeast G&P		$	189			$	355
Atlantic-Gulf			630				965
West			620				595
NGL & Petchem Services			1,016				915
Total segment profit		$	2,455			$	2,830
Adjustments:
Northeast G&P- loss related to compressor station fire		$	6			$	—
Atlantic-Gulf			—				—
West			—				—
NGL & Petchem Services - Geismar Incident adjustment for insurance and timing			(116	)			—
Total adjustments			(110	)		$	—
Adjusted segment profit:
Northeast G&P		$	195			$	355
Atlantic-Gulf			630				965
West			620				595
NGL & Petchem Services			900				915
Total adjusted segment profit		$	2,345			$	2,830
Depreciation and amortization (DD&A):
Northeast G&P		$	170			$	210
Atlantic-Gulf			430				495
West			235				235
NGL & Petchem Services			85				95
Total depreciation and amortization		$	920			$	1,035
Adjusted segment profit + DD&A:
Northeast G&P		$	365			$	565
Atlantic-Gulf			1,060				1,460
West			855				830
NGL & Petchem Services			985				1,010
Total adjusted segment profit + DD&A		$	3,265			$	3,865

 

9