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. 22, 2012
MEDIA CONTACT:		INVESTOR CONTACTS:
Jeff Pounds		Travis Campbell		Sharna Reingold
(918) 573-3332		(918) 573-2944		(918) 573-2078

Williams Partners Reports Year-End 2011 Financial Results

 

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Full-year Net Income is $1.38 Billion, Up 25% Over 2010

 

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Increase in Fee-Based Businesses, Higher NGL Margins Drive Strong 2011 Results

 

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Distributable Cash Flow Tops $1.6 Billion for 2011, Up 42% Over 2010

 

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Newly Announced Constitution Pipeline, Laser Acquisition Part of 3 Bcf/d Natural Gas Supply Hub in Northeast Pennsylvania

 

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Laser Acquisition Drives Increase in 2012-13 Guidance

 

Summary Financial Information		Full Year								4Q
Amounts in millions, except per-unit amounts.		2011				2010				2011				2010
(Unaudited)
Net income		$	1,378			$	1,101			$	391			$	286
Net income per common L.P. unit		$	3.69			$	2.66			$	1.05			$	0.76
Distributable cash flow (DCF) (1)		$	1,650			$	1,387			$	444			$	347
Less: Pre-partnership DCF (2)			—				(223	)			—				(12	)
DCF attributable to partnership operations		$	1,650			$	1,164			$	444			$	335
Cash distribution coverage ratio (1)			1.41x				1.30x				1.43x				1.25x

 

(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 and DCF for January-October 2010 from the assets acquired in November 2010, since these periods were prior to the receipt of cash flows from the acquired assets.

TULSA, Okla. – Williams Partners L.P. (NYSE: WPZ) today announced unaudited 2011 net income of $1.38 billion, or $3.69 per common limited-partner unit, compared with 2010 net income of $1.10 billion, or $2.66 per common unit.

 

Williams Partners L.P. (NYSE: WPZ)		Year-End 2011 Financial Results – Feb. 22, 2012			Page 1 of 10

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For fourth-quarter 2011, Williams Partners reported net income of $391 million, or $1.05 per common unit, compared with net income of $286 million, or $0.76 per common unit for the same period in 2010.

The increases in net income for the full-year and fourth-quarter 2011 periods are primarily due to higher natural gas liquid (NGL) margins in the midstream business and increased fee-based revenues in the midstream and gas pipeline businesses. There is a more detailed discussion of the midstream and gas pipeline results in the business segment performance section below.

Strong Results, Asset Acquisitions Drive 42-percent Increase in DCF for 2011

For 2011, Williams Partners’ distributable cash flow attributable to partnership operations was $1.65 billion, compared with $1.16 billion for 2010. The 42-percent increase in DCF attributable to partnership operations in 2011 was due to the previously noted strong results in the midstream business, as well as the growth of the partnership via asset acquisitions in the second half of 2010.

Susquehanna Supply Hub

Williams Partners recently announced the new Constitution Pipeline joint venture and the completion of the Laser Northeast Gathering System acquisition. These two milestones are the latest steps in Williams Partners’ strategy to create the Susquehanna Supply Hub, a major natural gas supply hub in northeastern Pennsylvania.

By 2015, Williams Partners expects the Susquehanna Supply Hub to be capable of gathering and delivering more than 3 billion cubic feet per day (Bcf/d) of Marcellus Shale production into four major interstate gas pipeline systems.

CEO Perspective

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

“The partnership performed exceptionally well in 2011, with distributable cash flow up more than 40 percent over 2010. Both our cash distribution growth and coverage ratio also remain strong.

“We have a number of considerable growth projects under way in all of our major areas of focus.

“The newly announced Constitution Pipeline and the recently closed Laser acquisition are the latest pieces of the 3 Bcf/d Susquehanna Supply Hub we’re building in northeast Pennsylvania.

 

Williams Partners L.P. (NYSE: WPZ)		Year-End 2011 Financial Results – Feb. 22, 2012			Page 2 of 10

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“We also have two major projects underway in the deepwater Gulf of Mexico and a significant volume of gas pipeline projects that will help meet the infrastructure demands for new gas-fired power generation.

“All of these projects are in-line with our strategy of building large-scale infrastructure to meet the growing demand for reliable and efficient fee-based services in the midstream and gas pipeline businesses.”

Laser Acquisition Drives Increase in 2012-13 Guidance

Williams Partners is increasing its 2012-13 adjusted segment profit and capital expenditure guidance to reflect the partnership’s acquisition of the Laser Northeast Gathering System. The Laser system is expected to grow significantly from its current volume of approximately 100 MMcf/d to approximately 1.3 Bcf/d by 2015. Williams Partners is also updating 2012-13 capital expenditure guidance to reflect the inclusion of the Constitution Pipeline.

Williams Partners’ updated assumptions for certain energy commodity prices for 2012-13 and the corresponding guidance for the partnership’s earnings and capital expenditures are displayed in the following table.

 

Williams Partners L.P. (NYSE: WPZ)		Year-End 2011 Financial Results – Feb. 22, 2012			Page 3 of 10

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Commodity Price Assumptions and Average NGL Margins		2012														2013
As of Feb. 22, 2012
		Low				Mid				High						Low				Mid				High
Natural Gas ($/MMBtu):
NYMEX		$	2.50			$	3.00			$	3.50					$	3.25			$	3.75			$	4.25
Rockies		$	2.30			$	2.80			$	3.30					$	3.05			$	3.55			$	4.05
San Juan		$	2.40			$	2.90			$	3.40					$	3.05			$	3.55			$	4.05
Oil / NGL:
Crude Oil - WTI ($ per barrel)		$	90			$	100			$	110					$	90			$	100			$	110
Crude to Gas Ratio			31.4x				33.7x				36.0x						25.9x				26.8x				27.7x
NGL to Crude Oil Relationship (1)			43	%			45	%			47	%					43	%			45	%			47	%
Average NGL Margins ($ per gallon)		$	0.65			$	0.78			$	0.90					$	0.58			$	0.70			$	0.81
Composite Frac Spread ($ per gallon) (2)		$	0.72			$	0.83			$	0.94					$	0.65			$	0.77			$	0.88
Williams Partners Guidance
Amounts are in millions except coverage ratio.
		Low				Mid				High						Low				Mid				High
DCF attributable to partnership ops. (3)		$	1,410			$	1,635			$	1,860					$	1,630			$	1,880			$	2,130
Total Cash Distribution (4)		$	1,344			$	1,375			$	1,406					$	1,486			$	1,567			$	1,648
Cash Distribution Coverage Ratio (3)			1.05x				1.19x				1.32x						1.10x				1.20x				1.29x
Adjusted Segment Profit (3):
Gas Pipeline		$	680			$	700			$	720					$	700			$	725			$	750
Midstream			1,050				1,275				1,500						1,150				1,375				1,600
Total Adjusted Segment Profit		$	1,730			$	1,975			$	2,220					$	1,850			$	2,100			$	2,350
Adjusted Segment Profit + DD&A:
Gas Pipeline		$	1,040			$	1,070			$	1,100					$	1,070			$	1,105			$	1,140
Midstream			1,340				1,575				1,810						1,460				1,695				1,930
Total Adjusted Segment Profit + DD&A		$	2,380			$	2,645			$	2,910					$	2,530			$	2,800			$	3,070
Capital Expenditures:
Maintenance		$	445			$	480			$	515					$	350			$	385			$	420
Growth			2,305				2,420				2,535						1,225				1,390				1,555
Total Capital Expenditures		$	2,750			$	2,900			$	3,050					$	1,575			$	1,775			$	1,975

 

(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)	Composite frac spread is based on Henry Hub natural gas and Mont Belvieu NGLs.

(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 are on an accural basis and reflect an approximate 6% (low), 8% (midpoint), and 10% (high) increase in quarterly limited partner cash distributions annually through 2013.

 

Williams Partners L.P. (NYSE: WPZ)		Year-End 2011 Financial Results – Feb. 22, 2012			Page 4 of 10

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Business Segment Performance

Williams Partners’ operations are reported through two business segments, Gas Pipeline and Midstream Gas & Liquids.

 

Consolidated Segment Profit		Full Year								4Q
Amounts in millions		2011				2010				2011				2010
Gas Pipeline		$	673			$	637			$	176			$	159
Midstream Gas & Liquids			1,223				937				341				259
Total Segment Profit		$	1,896			$	1,574			$	517			$	418
Adjustments			11				(32	)			2				8
Adjusted Segment Profit*		$	1,907			$	1,542			$	519			$	426

 

*	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. These systems have a combined peak day delivery capacity of more than 14 billion cubic feet per day (Bcf/d), and transport approximately 14 percent of the natural gas consumed in the United States.

Gas Pipeline reported segment profit of $673 million for 2011, compared with $637 million for 2010. For fourth quarter 2011, Gas Pipeline reported segment profit of $176 million, compared with $159 million for fourth quarter 2010.

Higher transportation revenues associated with expansion projects placed into service in 2010 and 2011 drove the improved results in full-year and fourth-quarter periods. Higher operating and depletion, depreciation and amortization expenses partially offset the higher transportation revenues.

Williams Partners is working on four expansion projects that it expects to be placed into service in 2012.

The Mid-South Expansion Project involves an expansion of the Transco mainline from Station 85 in Choctaw County, Ala., to markets as far downstream as North Carolina. The first phase of the project is expected to be placed into service in the third quarter of this year with a second stage placed into service in 2013. When complete, it will increase capacity by 225 Mdth/d.

 

Williams Partners L.P. (NYSE: WPZ)		Year-End 2011 Financial Results – Feb. 22, 2012			Page 5 of 10

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The Mid-Atlantic Connector Project involves an expansion of the Transco mainline from an existing interconnection with East Tennessee Natural Gas in North Carolina to markets as far downstream as Maryland. It is expected to be placed into service in the fourth quarter, and it will increase capacity by 142 Mdth/d.

The Cardinal System Expansion project involves an expansion of the Cardinal Pipeline which is an intrastate pipeline located in North Carolina. The expansion will add 199 Mdth/d of capacity and is expected to be placed into service in the second quarter. Williams Partners has a 45 percent ownership interest in this asset.

The partnership is also working on the North Seattle Lateral Delivery Expansion on Northwest Pipeline, which will be placed into service later this year. Williams Partners has executed agreements with a customer for the project to provide additional lateral capacity of approximately 84 Mdth/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 $1.22 billion for 2011, compared with segment profit of $937 million for 2010. For fourth quarter 2011, Midstream reported segment profit of $341 million, compared with $259 million for the same period in 2010.

Higher NGL margins and fee-based revenues drove the improvement in both the full-year and fourth-quarter periods. Higher operating expenses, including depreciation, partially offset the higher NGL margins and fee-based revenues in both periods. Higher NGL prices were the driver of the increased NGL margins in both periods.

Midstream’s fee-based revenues increased by 12 percent in 2011. This improvement was driven by new gathering business in the Marcellus Shale, increased throughput on the Perdido Norte gas and oil pipelines in the Gulf of Mexico and a rate increase in the Piceance Basin associated with an agreement executed in November 2010.

 

Williams Partners L.P. (NYSE: WPZ)		Year-End 2011 Financial Results – Feb. 22, 2012			Page 6 of 10

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NGL Margin Trend		2010																2011
		1Q				2Q				3Q				4Q				1Q				2Q				3Q				4Q
NGL margins (millions)		$	193			$	166			$	136			$	200			$	207			$	253			$	234			$	287
NGL equity volumes (gallons in millions)			332				302				271				317				289				308				274				317
Per-unit NGL margins ($/gallon)		$	0.58			$	0.55			$	0.50			$	0.63			$	0.71			$	0.83			$	0.85			$	0.91

Full-year per-unit NGL margins for 2011 were $0.83 per gallon, an increase of 46 percent over the full-year 2010 amount of $0.57 per gallon.

In addition to the previously discussed Susquehanna Supply Hub, the midstream business will continue work on several ongoing expansion projects in 2012 and beyond in all of its major locations.

Williams Partners has two major deepwater Gulf of Mexico projects under way. Construction has commenced on the Gulfstar FPS^TM, a spar-based floating production system with a capacity of 60,000 barrels of oil per day, up to 200 MMcf/d of natural gas and the capability to provide seawater injection services. Williams Partners has signed multiple agreements with Hess Corporation (NYSE: HES) and Chevron (NYSE: CVX) to utilize Gufstar FPS for production handling, export pipeline, oil and gas gathering and gas processing services in the Tubular Bells field development located in the eastern deepwater Gulf of Mexico. The project is expected to be in service in 2014.

Discovery, of which Williams Partners owns 60 percent, plans to construct the Keathley Canyon Connector, a 20-inch diameter, 215-mile subsea natural gas gathering pipeline for production from the Keathley Canyon, Walker Ridge and Green Canyon areas in the central deepwater Gulf of Mexico. Discovery has signed long-term agreements with the Lucius and Hadrian South owners for natural gas gathering and processing services for production from those fields.

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.

 

Williams Partners L.P. (NYSE: WPZ)		Year-End 2011 Financial Results – Feb. 22, 2012			Page 7 of 10

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

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

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

The partnership will host the year-end Q&A live webcast on Thursday, Feb. 23 at 11 a.m. EST. A limited number of phone lines will be available at (888) 481-2849. International callers should dial (719) 325-2268.

A link to the live webcast, as well as replays of the year-end webcast in both streaming and downloadable podcast formats following the event, will be available at www.williamslp.com.

 

Williams Partners L.P. (NYSE: WPZ)		Year-End 2011 Financial Results – Feb. 22, 2012			Page 8 of 10

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Form 10-K

The partnership plans to file its 2011 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.

About Williams Partners L.P. (NYSE: WPZ)

Williams Partners L.P. is a leading diversified master limited partnership focused on natural gas transportation; gathering, treating, and processing; storage; natural gas liquid (NGL) fractionation; and oil transportation. The partnership owns interests in three major interstate natural gas pipelines that, combined, deliver 14 percent of the natural gas consumed in the United States. The partnership’s gathering and processing assets include large-scale operations in the U.S. Rocky Mountains and both onshore and offshore along the Gulf of Mexico. Williams (NYSE: WMB) owns approximately 72 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.

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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:

 

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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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Seasonality of certain business components; and

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Natural gas, natural gas liquids, and crude oil 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:

 

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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;

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Availability of supplies, market demand, volatility of prices, and the availability and cost of capital;

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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);

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The strength and financial resources of our competitors;

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

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Development of alternative energy sources;

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The impact of operational and development hazards;

 

Williams Partners L.P. (NYSE: WPZ)		Year-End 2011 Financial Results – Feb. 22, 2012			Page 9 of 10

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Costs of, changes in, or the results of laws, government regulations (including safety and climate change regulation and changes in natural gas production from exploration and production areas that we serve), 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 risk of our customers and counterparties;

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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;

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Risks associated with future weather conditions;

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

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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 24, 2011, 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)		Year-End 2011 Financial Results – Feb. 22, 2012			Page 10 of 10

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Financial Highlights and Operating Statistics

(UNAUDITED)

Final

December 31, 2011

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Reconciliation of Non-GAAP Measures

(UNAUDITED)

 

 

		2010																				2011
(Dollars in millions, except coverage ratios)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Williams Partners L.P.
Reconciliation of Non-GAAP “Distributable Cash Flow” to GAAP “Net income”
Net income		$	322			$	240			$	253			$	286			$	1,101			$	307			$	338			$	342			$	391			$	1,378
Depreciation and amortization			140				140				140				148				568				150				154				155				152				611
Non-cash amortization of debt issuance costs included in interest expense			4				5				5				5				19				5				5				3				4				17
Equity earnings from investments			(26	)			(27	)			(24	)			(32	)			(109	)			(25	)			(36	)			(40	)			(41	)			(142	)
Distributions to noncontrolling interests			(6	)			(6	)			(6	)			—				(18	)			—				—				—				—				—
Involuntary conversion gain resulting from Ignacio fire			—				(4	)			—				—				(4	)			—				—				—				—				—
Involuntary conversion gain resulting from Hurricane Ike			—				(7	)			(7	)			—				(14	)			—				—				—				—				—
Impairment of certain gathering assets			—				—				—				9				9				—				—				—				—				—
Reimbursements (payments) from/(to) Williams under omnibus agreement			—				(1	)			1				3				3				8				2				6				15				31
Maintenance capital expenditures			(32	)			(46	)			(119	)			(104	)			(301	)			(34	)			(106	)			(148	)			(126	)			(414	)
Distributable Cash Flow excluding equity investments			402				294				243				315				1,254				411				357				318				395				1,481
Plus: Equity investments cash distributions to Williams Partners L.P.			29				43				29				32				133				30				40				50				49				169
Distributable Cash Flow			431				337				272				347				1,387				441				397				368				444				1,650
Less: Pre-partnership Distributable Cash Flow			158				21				32				12				223				—				—				—				—				—
Distributable Cash Flow attributable to partnership operations		$	273			$	316			$	240			$	335			$	1,164			$	441			$	397			$	368			$	444			$	1,650
Total cash distributed:		$	155			$	221			$	250			$	268			$	894			$	276			$	286			$	294			$	311			$	1,167
Coverage ratios:
Distributable Cash Flow attributable to partnership operations divided by Total cash distributed			1.76				1.43				0.96				1.25				1.30				1.60				1.39				1.25				1.43				1.41
Net income divided by Total cash distributed			2.08				1.09				1.01				1.07				1.23				1.11				1.18				1.16				1.26				1.18

 

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Reconciliation of GAAP “Segment Profit” to Non-GAAP “Adjusted Segment Profit”

(UNAUDITED)

 

		2010																				2011
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Gas Pipeline		$	169			$	148			$	161			$	159			$	637			$	175			$	152			$	170			$	176			$	673
Midstream Gas & Liquids			255				213				210				259				937				262				319				301				341				1,223
Segment Profit		$	424			$	361			$	371			$	418			$	1,574			$	437			$	471			$	471			$	517			$	1,896
Adjustments:
Gas Pipeline
Unclaimed property assessment accrual adjustment			—				(2	)			—				—				(2	)			—				—				—				—				—
Loss related to Eminence storage facility leak			—				—				—				5				5				4				3				6				2				15
Gain on sale of base gas from Hester storage field			(5	)			(3	)			—				—				(8	)			(4	)			—				—				—				(4	)
Total Gas Pipeline adjustments			(5	)			(5	)			—				5				(5	)			—				3				6				2				11
Midstream Gas & Liquids
Involuntary conversion gain related to Ignacio			—				(4	)			—				—				(4	)			—				—				—				—				—
Involuntary conversion gain related to Hurricane Ike			—				(7	)			(7	)			—				(14	)			—				—				—				—				—
Gain on sale of certain assets			—				—				(12	)			—				(12	)			—				—				—				—				—
Impairment of certain gathering assets			—				—				—				9				9				—				—				—				—				—
Settlement gain related to Green Canyon development			—				—				—				(6	)			(6	)			—				—				—				—				—
Total Midstream Gas & Liquids adjustments			—				(11	)			(19	)			3				(27	)			—				—				—				—				—
Total adjustments included in segment profit			(5	)			(16	)			(19	)			8				(32	)			—				3				6				2				11
Adjusted segment profit		$	419			$	345			$	352			$	426			$	1,542			$	437			$	474			$	477			$	519			$	1,907

 

2

---

Williams Partners L.P.

(UNAUDITED)

 

		2012 Guidance												2013 Guidance
(Dollars in millions, except coverage ratios)		Low				Midpoint				High				Low				Midpoint				High
Reconciliation of Non-GAAP “Distributable Cash Flow attributable to partnership operations” to GAAP “Net income”
Net income		$	1,160			$	1,400			$	1,640			$	1,260			$	1,523			$	1,785
Depreciation and amortization			650				670				690				680				700				720
Other			45				45				45				40				43				45
Maintenance capital expenditures			(445	)			(480	)			(515	)			(350	)			(385	)			(420	)
Distributable cash flow attributable to partnership operations		$	1,410			$	1,635			$	1,860			$	1,630			$	1,880			$	2,130
Total cash to be distributed *		$	1,344			$	1,375			$	1,406			$	1,486			$	1,567			$	1,648
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash to be distributed *			1.05				1.19				1.32				1.10				1.20				1.29
Net income divided by Total cash to be distributed *			0.86				1.02				1.17				0.85				0.97				1.08
* Distributions reflect growth rates of 6-10%.
Reconciliation of Non-GAAP “Adjusted Segment Profit” to GAAP “Segment Profit”
Segment Profit:
Midstream		$	1,050			$	1,275			$	1,500			$	1,150			$	1,375			$	1,600
Gas Pipeline			680				700				720				700				725				750
Total Segment Profit			1,730				1,975				2,220				1,850				2,100				2,350
Adjustments:
Midstream			—				—				—				—				—				—
Gas Pipeline			—				—				—				—				—				—
Adjusted segment profit		$	1,730			$	1,975			$	2,220			$	1,850			$	2,100			$	2,350

 

3

---

Consolidated Statement of Income

(UNAUDITED)

 

		2010																				2011
(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		$	407			$	380			$	409			$	409			$	1,605			$	416			$	407			$	429			$	426			$	1,678
Midstream Gas & Liquids			1,083				1,020				919				1,087				4,109				1,163				1,264				1,244				1,380				5,051
Intercompany eliminations			—				—				(1	)			2				1				—				—				—				—				—
Total revenues			1,490				1,400				1,327				1,498				5,715				1,579				1,671				1,673				1,806				6,729
Segment costs and expenses:
Costs and operating expenses			1,033				1,002				923				1,026				3,984				1,105				1,163				1,169				1,235				4,672
Selling, general, and administrative expenses			62				70				70				79				281				73				74				69				74				290
Other (income) expense - net			(3	)			(6	)			(13	)			7				(15	)			(11	)			(1	)			4				21				13
Segment costs and expenses			1,092				1,066				980				1,112				4,250				1,167				1,236				1,242				1,330				4,975
General corporate expenses			35				28				30				32				125				30				27				29				26				112
Operating income:
Gas Pipeline			160				138				151				150				599				166				138				153				158				615
Midstream Gas & Liquids			238				196				196				236				866				246				297				278				318				1,139
General corporate expenses			(35	)			(28	)			(30	)			(32	)			(125	)			(30	)			(27	)			(29	)			(26	)			(112	)
Total operating income			363				306				317				354				1,340				382				408				402				450				1,642
Equity earnings			26				27				24				32				109				25				36				40				41				142
Interest accrued			(81	)			(102	)			(103	)			(107	)			(393	)			(108	)			(107	)			(105	)			(106	)			(426	)
Interest capitalized			12				7				7				3				29				2				3				3				3				11
Interest income			3				—				—				1				4				1				—				—				1				2
Other income (expense) - net			(1	)			2				9				4				14				5				(2	)			2				2				7
Income before income taxes			322				240				254				287				1,103				307				338				342				391				1,378
Provision for income taxes			—				—				1				1				2				—				—				—				—				—
Net income			322				240				253				286				1,101				307				338				342				391				1,378
Less: Net income attributable to noncontrolling interests			6				5				5				—				16				—				—				—				—				—
Net income attributable to controlling interests		$	316			$	235			$	248			$	286			$	1,085			$	307			$	338			$	342			$	391			$	1,378
Allocation of net income for calculation of earnings per common unit:
Net income attributable to controlling interests		$	316			$	235			$	248			$	286			$	1,085			$	307			$	338			$	342			$	391			$	1,378
Allocation of net income to general partner and Class C units			284				65				85				73				517				71				74				79				84				308
Allocation of net income to common units		$	32			$	170			$	163			$	213			$	568			$	236			$	264			$	263			$	307			$	1,070
Net income, per common unit		$	0.61			$	0.66			$	0.63			$	0.76			$	2.66			$	0.81			$	0.91			$	0.91			$	1.05			$	3.69
Weighted-average number of common units outstanding (thousands)			52,777				255,777				260,508				282,058				213,539				289,845				290,213				290,477				290,477				290,255
Cash distributions per common unit		$	0.6575			$	0.6725			$	0.6875			$	0.7025			$	2.7200			$	0.7175			$	0.7325			$	0.7475			$	0.7625			$	2.9600

 

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.

 

4

---

Gas Pipeline

(UNAUDITED)

 

		2010																				2011
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Revenues:
Northwest Pipeline GP		$	106			$	103			$	103			$	110			$	422			$	110			$	106			$	107			$	111			$	434
Transcontinental Gas Pipe Line			300				278				305				299				1,182				305				301				322				315				1,243
Other			1				(1	)			1				—				1				1				—				—				—				1
Total revenues			407				380				409				409				1,605				416				407				429				426				1,678
Segment costs and expenses:
Costs and operating expenses			212				199				216				212				839				219				225				237				213			$	894
Selling, general and administrative expenses			33				39				37				42				151				41				40				35				39				155
Other (income) expense - net			2				4				5				5				16				(10	)			4				4				16				14
Total segment costs and expenses			247				242				258				259				1,006				250				269				276				268				1,063
Equity earnings			9				10				10				9				38				9				14				17				18				58
Reported segment profit:
Northwest Pipeline GP			54				50				53				55				212				56				51				50				58				215
Transcontinental Gas Pipe Line			108				91				100				95				394				111				89				102				104				406
Other			7				7				8				9				31				8				12				18				14				52
Total reported segment profit			169				148				161				159				637				175				152				170				176				673
Adjustments:
Northwest Pipeline GP			—				(1	)			—				—				(1	)			—				—				—				—				—
Transcontinental Gas Pipe Line			(5	)			(4	)			—				5				(4	)			—				3				6				2				11
Total adjustments			(5	)			(5	)			—				5				(5	)			—				3				6				2				11
Adjusted segment profit:
Northwest Pipeline GP			54				49				53				55				211				56				51				50				58				215
Transcontinental Gas Pipe Line			103				87				100				100				390				111				92				108				106				417
Other			7				7				8				9				31				8				12				18				14				52
Total adjusted segment profit		$	164			$	143			$	161			$	164			$	632			$	175			$	155			$	176			$	178			$	684
Operating statistics (Tbtu)
Northwest Pipeline GP
Throughput			179.4				156.5				152.7				183.8				672.4				176.8				142.3				132.6				186.1				637.8
Avg. daily transportation volumes			2.0				1.7				1.7				2.0				1.8				2.0				1.6				1.4				2.0				1.7
Avg. daily firm reserved capacity			2.8				2.8				2.8				2.8				2.8				2.9				2.9				2.9				2.9				2.9
Transcontinental Gas Pipe Line
Throughput			586.1				459.6				517.1				593.5				2,156.3				652.2				535.2				583.9				636.5				2,407.8
Avg. daily transportation volumes			6.5				5.1				5.6				6.5				5.9				7.2				5.9				6.3				6.9				6.6
Avg. daily firm reserved capacity			7.0				6.9				7.1				7.6				7.2				7.7				7.8				8.0				8.7				8.0

 

5

---

Midstream Gas & Liquids

(UNAUDITED)

 

		2010																				2011
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Revenues:
Gathering & processing		$	149			$	152			$	155			$	163			$	619			$	163			$	172			$	182			$	186			$	703
NGL sales from gas processing			338				272				229				298				1,137				306				360				331				384				1,381
Production handling and transportation			29				26				26				26				107				25				26				32				29				112
Marketing sales			999				897				796				1,025				3,717				1,122				1,233				1,201				1,361				4,917
Other revenues			43				42				38				40				163				42				47				45				47				181
			1,558				1,389				1,244				1,552				5,743				1,658				1,838				1,791				2,007				7,294
Intrasegment eliminations			(475	)			(369	)			(325	)			(465	)			(1,634	)			(495	)			(574	)			(547	)			(627	)			(2,243	)
Total revenues			1,083				1,020				919				1,087				4,109				1,163				1,264				1,244				1,380				5,051
Segment costs and expenses:
NGL cost of goods sold			145				106				93				98				442				99				107				97				97				400
Marketing cost of goods sold			997				902				792				1,006				3,697				1,109				1,221				1,193				1,359				4,882
Other cost of goods sold			10				7				7				6				30				7				9				5				11				32
Operating costs			144				157				141				166				608				166				176				181				184				707
Other
Selling, general, and administrative expenses			29				31				32				38				130				32				34				33				36				135
Other (income) expense - net			(5	)			(10	)			(17	)			2				(30	)			(1	)			(6	)			4				2				(1	)
Intrasegment eliminations			(475	)			(369	)			(325	)			(465	)			(1,634	)			(495	)			(574	)			(547	)			(627	)			(2,243	)
Total segment costs and expenses			845				824				723				851				3,243				917				967				966				1,062				3,912
Equity earnings			17				17				14				23				71				16				22				23				23				84
Reported segment profit			255				213				210				259				937				262				319				301				341				1,223
Adjustments			—				(11	)			(19	)			3				(27	)			—				—				—				—				—
Adjusted segment profit		$	255			$	202			$	191			$	262			$	910			$	262			$	319			$	301			$	341			$	1,223
Operating statistics
Gathering and Processing
Gathering volumes (TBtu)			312				312				317				321				1,262				321				337				345				374				1,377
Plant inlet natural gas volumes (Tbtu)			403				395				389				412				1,599				387				398				399				408				1,592
NGL equity sales (million gallons) *			332				302				271				317				1,222				289				308				274				317				1,188
NGL margin ($/gallon)		$	0.58			$	0.55			$	0.50			$	0.63			$	0.57			$	0.71			$	0.83			$	0.85			$	0.91			$	0.83
NGL production (million gallons) *			687				671				636				739				2,733				683				729				693				788				2,893
Discovery Producer Services LLC (equity investment) - 100%
NGL equity sales (million gallons)			30				28				23				24				105				20				19				21				19				79
NGL production (million gallons)			89				84				81				91				345				83				80				76				68				307
Laurel Mountain Midstream, LLC (equity investment) - 100%
Gathering volumes (Tbtu)			9				10				11				12				42				12				13				12				15				52
Overland Pass Pipeline Company LLC (equity investment) - 100%
NGL Transportation volumes (Mbbls)			10,456				11,643				9,856				11,362				43,317				10,483				11,836				12,132				13,696				48,147

 

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

 

6

---

Capital Expenditures and Investments

(UNAUDITED)

 

		2010																				2011
(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 GP		$	10			$	24			$	51			$	35			$	120			$	14			$	22			$	36			$	43			$	115
Transcontinental Gas Pipe Line			56				83				98				145				382				84				77				107				118				386
Total			66				107				149				180				502				98				99				143				161				501
Midstream Gas & Liquids			54				114				97				70				335				58				54				146				232				490
Total*		$	120			$	221			$	246			$	250			$	837			$	156			$	153			$	289			$	393			$	991
Purchase of businesses:
Gas Pipeline		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Midstream Gas & Liquids			—				—				—				608				608				—				—				31				—				31
Total		$	—			$	—			$	—			$	608			$	608			$	—			$	—			$	31			$	—			$	31
Purchase of investments:
Gas Pipeline**		$	1			$	—			$	1			$	3			$	5			$	8			$	179			$	2			$	2			$	191
Midstream Gas & Liquids			8				6				434				23				471				28				60				37				55				180
Total		$	9			$	6			$	435			$	26			$	476			$	36			$	239			$	39			$	57			$	371
Summary:
Gas Pipeline		$	67			$	107			$	150			$	183			$	507			$	106			$	278			$	145			$	163			$	692
Midstream Gas & Liquids			62				120				531				701				1,414				86				114				214				287				701
Total		$	129			$	227			$	681			$	884			$	1,921			$	192			$	392			$	359			$	450			$	1,393
Cumulative summary:
Gas Pipeline		$	67			$	174			$	324			$	507			$	507			$	106			$	384			$	529			$	692			$	692
Midstream Gas & Liquids			62				182				713				1,414				1,414				86				200				414				701				701
Total		$	129			$	356			$	1,037			$	1,921			$	1,921			$	192			$	584			$	943			$	1,393			$	1,393
Capital expenditures incurred and purchase of investments:
Increases to property, plant, and equipment		$	103			$	181			$	235			$	240			$	759			$	142			$	174			$	332			$	408			$	1,056
Purchase of businesses			—				—				—				608				608				—				—				31				—				31
Purchase of investments			9				6				435				26				476				36				239				39				57				371
Total		$	112			$	187			$	670			$	874			$	1,843			$	178			$	413			$	402			$	465			$	1,458
*Increases to property, plant, and equipment		$	103			$	181			$	235			$	240			$	759			$	142			$	174			$	332			$	408			$	1,056
Changes in related accounts payable and accrued liabilities			17				40				11				10				78				14				(21	)			(43	)			(15	)			(65	)
Capital expenditures		$	120			$	221			$	246			$	250			$	837			$	156			$	153			$	289			$	393			$	991

 

**	The second quarter of 2011 includes the acquisition of a 24.5 percent interest in Gulfstream Natural Gas System, L.L.C. from a subsidiary of Williams.

 

7

---

Depreciation and Amortization

(UNAUDITED)

 

		2010																				2011
(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 GP		$	22			$	22			$	22			$	22			$	88			$	23			$	22			$	23			$	23			$	91
Transcontinental Gas Pipe Line			63				62				62				65				252				64				67				65				64				260
Total			85				84				84				87				340				87				89				88				87				351
Midstream Gas & Liquids			55				56				56				61				228				63				65				67				65				260
Total		$	140			$	140			$	140			$	148			$	568			$	150			$	154			$	155			$	152			$	611

 

8