Exhibit 99.1
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| NewsRelease | |  |
NYSE: WPZ
Date:Feb. 22, 2007
Williams Partners L.P. Reports Fourth-Quarter and Full-Year Financial Results
Continued Strong NGL Margins, Fee-Based Revenue at Four Corners
Combined Distributable Cash Flow Up 11%, Adjusted EBITDA Up 17.5% for 2006
Cash Distribution Increased for Fourth Consecutive Quarter
TULSA, Okla. — Williams Partners L.P. (NYSE:WPZ) today announced unaudited 2006 net income of $146.9 million, or $1.62 per common unit, compared with a 2005 net income of $118.4 million and 44 cents per common unit. For fourth-quarter 2006, Williams Partners reported net income of $32.2 million, or 45 cents per common unit, compared with 2005 fourth quarter net income of $32.2 million and 46 cents per common unit.
Quarter-over-quarter and year-over-year comparisons throughout this release are based on restated results following the Dec. 13, 2006, close of the partnership’s acquisition of the remaining 74.9 percent interest in Williams Four Corners LLC from Williams (NYSE:WMB).
Distributable cash flow for Williams Partners and its 40 percent interest in Discovery totaled $184.4 million for 2006, compared to $166.4 million for 2005. For the fourth quarter of 2006, the partnership totaled $42.3 million in distributable cash flow, compared with $43.2 million for fourth-quarter 2005.
Adjusted EBITDA for Williams Partners and its Discovery interest was $213.4 million for 2006, compared to $181.6 million for 2005. For fourth-quarter 2006, this measure was $51.8 million, compared to $48.3 million for fourth-quarter 2005.
The improved results in 2006 are due primarily to the strong performance in the Gathering and Processing — West segment, which includes the Four Corners asset. Also driving the positive results were higher equity earnings from our investment in Discovery, which is part of the Gathering and Processing — Gulf segment, and higher storage revenues at Conway within the NGL Services segment.
Four Corners’ strong performance in 2006 was driven by record natural gas liquids (NGL) margins on higher natural gas sales volumes, along with higher fee-based gathering and processing revenues. Its performance was partially offset by higher operating and maintenance expenses.
The fourth-quarter 2006 results were also driven by Four Corners’ performance, along with higher storage revenues at Conway. These benefits were partially offset by lower equity earnings at Discovery and higher interest expense associated with the Four Corners transaction financing. Discovery’s equity earnings in fourth-quarter 2006 fell from its fourth-quarter 2005 level, which included additional processing of stranded volumes from the 2005 hurricane season.
Distributable cash flow and adjusted EBITDA are key measures of the partnership’s financial performance. Definitions for distributable cash flow and adjusted EBITDA are included in the body of this press release.
Total enterprise value grew to $2.3 billion by the end of 2006, compared to approximately $300 million at the time of the partnership’s initial public offering. During 2006, Williams Partners continued to deliver stable and consistent cash flows by increasing cash distributions, which have grown 34 percent over the initial distribution level.
Chief Operating Officer Perspective
“The partnership’s full-year results were driven by the strong performance of our core assets, in terms of both record-level NGL margins and increasing fee-based revenues,” said Alan Armstrong, chief operating officer of the general partner of Williams Partners.
“For 2007 we anticipate solid growth of our base assets. This year we expect an unprecedented number of well connects for our operations in the Four Corners area. In addition, our Discovery partnership began laying 35 miles of pipeline in the deepwater Gulf of Mexico to extend our existing system out to the Tahiti prospect in 4,400 feet of water.”
Increase in Cash Distribution to Unitholders
Subsequent to the close of the fourth quarter, the board of directors of the general partner of Williams Partners increased the quarterly cash distribution payable to unitholders to 47 cents from 45 cents. This was the fourth consecutive quarter the partnership increased its cash distribution, reflecting the continued strong performance of its asset base.
Distributable Cash Flow and Adjusted EBITDA Definitions
Williams Partners defines distributable cash flow as net income plus the non-cash affiliate interest expense associated with the advances from affiliate that were forgiven by Williams, depreciation, amortization and accretion, and the amortization of a natural gas purchase contract, less its equity earnings in Discovery, as well as adjustments for certain non-cash, non-recurring items, plus reimbursements from Williams under an omnibus agreement and less maintenance capital expenditures. For Discovery, distributable cash flow is defined as net income plus depreciation and accretion and less maintenance capital expenditures. The partnership’s equity share of Discovery’s distributable cash flow is 40 percent.
Williams Partners defines adjusted EBITDA excluding investment in Discovery as the sum of net income plus interest (income) expense and depreciation, amortization and accretion, and the amortization of a natural gas purchase contract, less equity earnings in Discovery, as well as adjustments for certain non-cash, non-recurring items. For Discovery, adjusted EBITDA is defined as net income plus interest (income) expense, depreciation and accretion, as well as adjustments for certain non-cash, non-recurring items. The partnership’s equity share of Discovery’s adjusted EBITDA is 40 percent.
Schedules presenting Williams Partners’ consolidated statements of income, segment profit and operating information, as well as schedules reconciling adjusted EBITDA and distributable cash flow to measures included in Generally Accepted Accounting Principles are available on Williams Partners’ Web site at www.williamslp.com and as an attachment to this document.
Today’s Analyst Call
Williams Partners’ management will discuss the partnership’s year-end financial results during an analyst presentation to be webcast live beginning at noon Eastern today.
Participants are encouraged to access the presentation and corresponding slides via www.williamslp.com. A limited number of phone lines also will be available at (800) 361-0912. International callers should dial (913) 981-5559. Callers should dial in at least 10 minutes prior to the start of the discussion. Replay of the year-end webcast will be available for two weeks at www.williamslp.com.
Form 10-K
The partnership plans to file its Form 10-K with the Securities and Exchange Commission during the week of Feb. 26. 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. primarily gathers, transports and processes natural gas and fractionates and stores natural gas liquids. The general partner is Williams Partners GP LLC. More information is atwww.williamslp.com.
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Williams Partners’ reports, filings and other public announcements might contain or incorporate by reference forward-looking statements — statements that do not directly or exclusively relate to historical facts. You typically can identify forward-looking statements by the use of forward-looking words, such as “anticipate,” believe,” “could,” “continue,” “estimate,” “expect,” “forecast,” “may,” “plan,” “potential,” “project,” “schedule,” “will” and other similar words. These statements are based on our intentions, beliefs and assumptions about future events and are subject to risks, uncertainties and other factors. Actual results could differ materially from those contemplated by the forward-looking statements. In addition to any assumptions, risks, uncertainties and other factors referred to specifically in connection with such statements, other factors could cause our actual results to differ materially from the results expressed or implied in any forward-looking statements. Those risks, uncertainties and factors include, among others: Williams Partners may not have sufficient cash from operations to enable it to pay the minimum quarterly distribution following establishment of cash reserves and payment of fees and expenses, including payments to its general partner; because of the natural decline in production from existing wells and competitive factors, the success of Williams Partners’ gathering and transportation businesses depends on its ability to connect new sources of natural gas supply, which is dependent on factors beyond its control; Williams Partners’ processing, fractionation and storage business could be affected by any decrease in the price of natural gas liquids or a change in the price of natural gas liquids relative to the price of natural gas; lower natural gas and oil prices could adversely affect Williams Partners’ fractionation and storage businesses; Williams Partners depends on certain key customers and producers for a significant portion of its revenues and supply of natural gas and natural gas liquids and the loss of any of these key customers or producers could result in a decline in its revenues and cash available to pay distributions; if third-party pipelines and other facilities interconnected to Williams Partners’ pipelines and facilities become unavailable to transport natural gas and natural gas liquids or to treat natural gas, Williams Partners’ revenues and cash available to pay distributions could be adversely affected; Williams Partners’ future financial and operating flexibility may be adversely affected by restrictions in its indentures and by its leverage; Williams Partners’ partnership agreement limits its general partner’s fiduciary duties to Williams Partner’s unitholders for actions taken by the general partner that might otherwise constitute breaches of fiduciary duty; even if unitholders are dissatisfied, they currently have little ability to
remove Williams Partners’ general partner without its consent; The Williams Companies, Inc.’s credit agreement and The Williams Companies, Inc.’s public indentures contain financial and operating restrictions that may limit Williams Partners’ access to credit; in addition, Williams Partners’ ability to obtain credit in the future will be affected by The Williams Company Inc’s credit ratings; Williams Partners’ general partner and its affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interest to the detriment of Williams Partners’ unitholders; unitholders may be required to pay taxes on their share of Williams Partners’ income even if they do not receive any cash distributions from Williams Partners; and Williams Partners’ operations are subject to operational hazards and unforeseen interruptions for which it may or may not be adequately insured. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors are urged to closely consider the disclosures and risk factors in Williams Partners’ reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission available from Williams Partners’ offices or from Williams Partners’ website at www.williamslp.com.
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Contacts: | | Julie Gentz |
| | | Williams (media relations) |
| | | (918) 573-3053 |
| | | |
| | | Sharna Reingold |
| | | Williams (investor relations) |
| | | (918) 573-2078 |
Reconciliation of Non-GAAP Measures
(UNAUDITED)
This press release includes certain financial measures, Adjusted EBITDA Excluding Investment in Discovery, in our case, and Adjusted EBITDA in Discovery’s case, Distributable Cash Flow and Distributable Cash Flow per Limited Partner Unit that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission. For Williams Partners L.P., we define Adjusted EBITDA Excluding Investment in Discovery as the sum of net income (loss) plus interest (income) expense and depreciation, amortization and accretion, and the amortization of a natural gas purchase contract, less our equity earnings in Discovery and we also adjust for certain non-cash, non-recurring items. For Discovery, we define Adjusted EBITDA as net income plus interest (income) expense, depreciation, amortization and accretion and we also adjust for certain non-cash, non-recurring items. Our equity share of Discovery’s Adjusted EBITDA is 40%.
For Williams Partners L.P. we define Distributable Cash Flow as net income (loss) plus the non-cash affiliate interest expense associated with the advances from affiliate that were forgiven by Williams, depreciation, amortization and accretion, and the amortization of a natural gas purchase contract, less our equity earnings in Discovery, as well as adjustments for certain non-cash, non-recurring items, plus reimbursements from Williams under an omnibus agreement and less maintenance capital expenditures. For Discovery we define Distributable Cash Flow as net income (loss) plus depreciation, amortization and accretion and less maintenance capital expenditures. Our equity share of Discovery’s Distributable Cash Flow is 40%.
For Williams Partners L.P. we define Distributable Cash Flow per Limited Partner Unit as Distributable Cash Flow, as defined in the preceding paragraph, attributable to partnership operations plus the actual cash distributed by Discovery. The total Distributable Cash Flow attributable to partnership operations is then allocated between the general partner and the limited partners in accordance with the cash distribution provisions of our partnership agreement. The resulting Distributable Cash Flow attributable to partnership operations and to its limited partners is then divided by the weighted average limited partner units outstanding to arrive at Distributable Cash Flow per Limited Partner Unit.
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 widely 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 EBITDA nor Distributable Cash Flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income (loss) or cash flow from operations. Distributable Cash Flow per Limited Partner is not presented as an alternative to net income per unit. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.
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| | | 2005* | | | 2006* |
| (Thousands, except per-unit amounts) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | Y-T-D | | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | Y-T-D |
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Williams Partners L.P. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Non-GAAP “Adjusted EBITDA Excluding Equity Investments” to GAAP “Net income” | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Net Income | | $ | 26,206 | | | $ | 28,664 | | | $ | 31,252 | | | $ | 32,230 | | | $ | 118,352 | | | | $ | 37,624 | | | $ | 33,594 | | | $ | 43,404 | | | $ | 32,246 | | | $ | 146,868 | |
| Interest expense | | | 3,004 | | | | 2,982 | | | | 2,014 | | | | 238 | | | | 8,238 | | | | | 236 | | | | 648 | | | | 3,271 | | | | 5,678 | | | | 9,833 | |
| Interest income | | | — | | | | — | | | | (76 | ) | | | (89 | ) | | | (165 | ) | | | | (70 | ) | | | (110 | ) | | | (462 | ) | | | (958 | ) | | | (1,600 | ) |
| Depreciation, amortization and accretion | | | 10,631 | | | | 10,601 | | | | 10,569 | | | | 10,778 | | | | 42,579 | | | | | 10,714 | | | | 10,852 | | | | 10,944 | | | | 11,182 | | | | 43,692 | |
| Amortization of gas purchase contract | | | — | | | | — | | | | 581 | | | | 1,452 | | | | 2,033 | | | | | 1,354 | | | | 1,322 | | | | 1,322 | | | | 1,322 | | | | 5,320 | |
| Cumulative effect of change in accounting principle | | | — | | | | — | | | | — | | | | 1,322 | | | | 1,322 | | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Equity earnings — Discovery | | | (2,212 | ) | | | (691 | ) | | | (66 | ) | | | (5,362 | ) | | | (8,331 | ) | | | | (3,781 | ) | | | (2,347 | ) | | | (4,055 | ) | | | (1,850 | ) | | | (12,033 | ) |
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| Adjusted EBITDA Excluding Equity Investments | | $ | 37,629 | | | $ | 41,556 | | | $ | 44,274 | | | $ | 40,569 | | | $ | 164,028 | | | | $ | 46,077 | | | $ | 43,959 | | | $ | 54,424 | | | $ | 47,620 | | | $ | 192,080 | |
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Discovery Producer Services | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Non-GAAP “Adjusted EBITDA” to GAAP “Net income” | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Income | | $ | 5,531 | | | $ | 1,727 | | | $ | 166 | | | $ | 13,228 | | | $ | 20,652 | | | | $ | 9,452 | | | $ | 5,868 | | | $ | 10,138 | | | $ | 4,625 | | | $ | 30,083 | |
| Interest (income) | | | (284 | ) | | | (389 | ) | | | (498 | ) | | | (514 | ) | | | (1,685 | ) | | | | (626 | ) | | | (601 | ) | | | (608 | ) | | | (569 | ) | | | (2,404 | ) |
| Depreciation and accretion | | | 6,113 | | | | 6,126 | | | | 6,127 | | | | 6,428 | | | | 24,794 | | | | | 6,379 | | | | 6,374 | | | | 6,380 | | | | 6,429 | | | | 25,562 | |
| Cumulative effect of change in accounting principle | | | — | | | | — | | | | — | | | | 176 | | | | 176 | | | | | — | | | | — | | | | — | | | | — | | | | — | |
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| Adjusted EBITDA — 100% | | $ | 11,360 | | | $ | 7,464 | | | $ | 5,795 | | | $ | 19,318 | | | $ | 43,937 | | | | $ | 15,205 | | | $ | 11,641 | | | $ | 15,910 | | | $ | 10,485 | | | $ | 53,241 | |
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| Adjusted EBITDA — our 40% interest | | $ | 4,544 | | | $ | 2,986 | | | $ | 2,318 | | | $ | 7,727 | | | $ | 17,575 | | | | $ | 6,082 | | | $ | 4,656 | | | $ | 6,364 | | | $ | 4,194 | | | $ | 21,296 | |
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| * | | Because Four Corners was an affiliate of Williams at the time of the acquisition, the transaction was between entities under common control, and has been accounted for at historical cost. Accordingly, these tables have been restated to reflect the historical results of Four Corners throughout the periods presented. |
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| | | 2005* | | | 2006* |
| (Thousands, except per-unit amounts) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | Y-T-D | | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | Y-T-D |
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Williams Partners L.P. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Non-GAAP “Distributable Cash Flow Excluding Equity Investments” to GAAP “Net income” | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Net income | | $ | 26,206 | | | $ | 28,664 | | | $ | 31,252 | | | $ | 32,230 | | | $ | 118,352 | | | | $ | 37,624 | | | $ | 33,594 | | | $ | 43,404 | | | $ | 32,246 | | | $ | 146,868 | |
Interest expense — Affiliate(a) | | | 2,805 | | | | 2,812 | | | | 1,822 | | | | 22 | | | | 7,461 | | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Depreciation, amortization and accretion | | | 10,631 | | | | 10,601 | | | | 10,569 | | | | 10,778 | | | | 42,579 | | | | | 10,714 | | | | 10,852 | | | | 10,944 | | | | 11,182 | | | | 43,692 | |
| Amortization of natural gas purchase contract | | | — | | | | — | | | | 581 | | | | 1,452 | | | | 2,033 | | | | | 1,354 | | | | 1,322 | | | | 1,322 | | | | 1,322 | | | | 5,320 | |
| Equity earnings – Discovery | | | (2,212 | ) | | | (691 | ) | | | (66 | ) | | | (5,362 | ) | | | (8,331 | ) | | | | (3,781 | ) | | | (2,347 | ) | | | (4,055 | ) | | | (1,850 | ) | | | (12,033 | ) |
| Cumulative effect of change in accounting principle | | | — | | | | — | | | | — | | | | 1,322 | | | | 1,322 | | | | | — | | | | — | | | | — | | | | — | | | | — | |
Reimbursements from Williams under omnibus agreement(b) | | | — | | | | — | | | | — | | | | 1,610 | | | | 1,610 | | | | | 1,248 | | | | 1,183 | | | | 1,813 | | | | 996 | | | | 5,240 | |
Maintenance capital expenditures(c) | | | (2,752 | ) | | | (2,070 | ) | | | (4,370 | ) | | | (6,647 | ) | | | (15,839 | ) | | | | (6,391 | ) | | | (6,636 | ) | | | (7,357 | ) | | | (6,017 | ) | | | (26,401 | ) |
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| Distributable Cash Flow Excluding Equity Investments | | $ | 34,678 | | | $ | 39,316 | | | $ | 39,788 | | | | 35,405 | | | $ | 149,187 | | | | $ | 40,768 | | | $ | 37,968 | | | $ | 46,071 | | | $ | 37,879 | | | $ | 162,686 | |
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| Less: Pre-partnership Four Corners net income allocated to general partner | | | | | | | | | | | | | | | | | | | | | | | | (33,415 | ) | | $ | (30,624 | ) | | $ | (31,445 | ) | | $ | (20,967 | ) | | $ | (116,451 | ) |
| Less: Pre-partnership Four Corners depreciation, amortization and accretion expense | | | | | | | | | | | | | | | | | | | | | | | | (9,814 | ) | | | (9,666 | ) | | | (7,517 | ) | | | (6,096 | ) | | | (33,093 | ) |
| Plus: Pre-partnership Four Corners maintenance capital expenditures | | | | | | | | | | | | | | | | | | | | | | | | 5,226 | | | | 4,872 | | | | 4,200 | | | | 3,314 | | | | 17,612 | |
| Plus: Discovery’s cash distributions to Williams Partners L.P. | | | | | | | | | | | | | | | | | | | | | | | | 4,400 | | | $ | 3,600 | | | $ | 4,000 | | | $ | 4,400 | | | $ | 16,400 | |
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| Distributable cash flow attributable to partnership operations | | | | | | | | | | | | | | | | | | | | | | | | 7,165 | | | | 6,150 | | | | 15,309 | | | | 18,530 | | | | 47,154 | |
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| Distributable Cash Flow attributable to partnership operations allocable to general partner | | | | | | | | | | | | | | | | | | | | | | | | 410 | | | | 125 | | | | 2,456 | | | | 3,183 | | | | 6,174 | |
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| Distributable Cash Flow attributable to limited partnership operations allocable to limited partners | | | | | | | | | | | | | | | | | | | | | | | $ | 6,755 | | | $ | 6,025 | | | $ | 12,853 | | | $ | 15,347 | | | $ | 40,980 | |
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| Weighted average number of units outstanding: | | | | | | | | | | | | | | | | | | | | | | | | 14,006,146 | | | | 14,923,619 | | | | 21,597,072 | | | | 25,266,210 | | | | 18,986,368 | |
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| Distributable Cash Flow attributable to partnership operations per limited partner unit: | | | | | | | | | | | | | | | | | | | | | | | $ | 0.48 | | | $ | 0.40 | | | $ | 0.60 | | | $ | 0.61 | | | $ | 2.09 | |
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| (a) Distributable cash flow includes the affiliate interest expense associated with the advances from affiliate that were forgiven by Williams in connection with our initial public offering. This interest expense did not result in a cash outlay for the Williams Partners Predecessor entity. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| (b) 4th quarter amount includes both a $1.6 million contribution to Discovery and the related receipt from Williams under the omnibus agreement for a net-zero impact to distributable cash flow. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| (c) Maintenance capital expenditures includes certain well connection capital. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Discovery Producer Services | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Non-GAAP “Distributable Cash Flow” to GAAP “Net income” | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Net income | | $ | 5,531 | | | $ | 1,727 | | | $ | 166 | | | $ | 13,228 | | | $ | 20,652 | | | | $ | 9,452 | | | $ | 5,868 | | | $ | 10,138 | | | $ | 4,625 | | | $ | 30,083 | |
| Depreciation and accretion | | | 6,113 | | | | 6,126 | | | | 6,127 | | | | 6,428 | | | | 24,794 | | | | | 6,379 | | | | 6,374 | | | | 6,380 | | | | 6,429 | | | | 25,562 | |
| Cumulative effect of change in accounting principle | | | — | | | | — | | | | — | | | | 176 | | | | 176 | | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Maintenance capital expenditures | | | (1,866 | ) | | | (156 | ) | | | (137 | ) | | | (375 | ) | | | (2,534 | ) | | | | (516 | ) | | | (506 | ) | | | (262 | ) | | | 22 | | | | (1,262 | ) |
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| Distributable Cash Flow — 100% | | $ | 9,778 | | | $ | 7,697 | | | $ | 6,156 | | | $ | 19,457 | | | $ | 43,088 | | | | $ | 15,315 | | | $ | 11,736 | | | $ | 16,256 | | | $ | 11,076 | | | $ | 54,383 | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Distributable Cash Flow — our 40% interest | | $ | 3,911 | | | $ | 3,079 | | | $ | 2,462 | | | $ | 7,783 | | | $ | 17,235 | | | | $ | 6,126 | | | $ | 4,694 | | | $ | 6,502 | | | $ | 4,431 | | | $ | 21,753 | |
| | | | | | |
| | |
| * | | Because Four Corners was an affiliate of Williams at the time of the acquisition, the transaction was between entities under common control, and has been accounted for at historical cost. Accordingly, these tables have been restated to reflect the historical results of our Four Corners throughout the periods presented. |
Consolidated Statements of Income
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2005* | | | | 2006* | |
| (Thousands) | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Y-T-D | | | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Y-T-D | |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Product sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | $ | 53,564 | | | $ | 52,617 | | | $ | 61,914 | | | $ | 67,925 | | | $ | 236,020 | | | | $ | 58,396 | | | $ | 63,370 | | | $ | 68,542 | | | $ | 64,767 | | | $ | 255,075 | |
| Third-party | | | 1,273 | | | | 1,345 | | | | 1,855 | | | | 4,255 | | | | 8,728 | | | | | 2,792 | | | | 7,766 | | | | 4,553 | | | | 1,808 | | | | 16,919 | |
| Gathering and processing: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | 8,728 | | | | 9,177 | | | | 8,559 | | | | 10,291 | | | | 36,755 | | | | | 9,933 | | | | 10,756 | | | | 10,162 | | | | 11,377 | | | | 42,228 | |
| Third-party | | | 48,038 | | | | 49,314 | | | | 51,121 | | | | 49,568 | | | | 198,041 | | | | | 51,376 | | | | 49,405 | | | | 52,679 | | | | 52,972 | | | | 206,432 | |
| Storage | | | 4,388 | | | | 4,638 | | | | 5,409 | | | | 5,855 | | | | 20,290 | | | | | 5,105 | | | | 5,924 | | | | 6,581 | | | | 7,627 | | | | 25,237 | |
| Fractionation | | | 2,430 | | | | 2,307 | | | | 2,386 | | | | 3,647 | | | | 10,770 | | | | | 3,953 | | | | 2,989 | | | | 2,708 | | | | 2,048 | | | | 11,698 | |
| Other | | | 851 | | | | 858 | | | | 1,096 | | | | 1,563 | | | | 4,368 | | | | | 1,180 | | | | 976 | | | | 1,357 | | | | 2,308 | | | | 5,821 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total revenues | | | 119,272 | | | | 120,256 | | | | 132,340 | | | | 143,104 | | | | 514,972 | | | | | 132,735 | | | | 141,186 | | | | 146,582 | | | | 142,907 | | | | 563,410 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cost and expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Product cost and shrink replacement: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | 13,009 | | | | 9,349 | | | | 11,884 | | | | 24,538 | | | | 58,780 | | | | | 21,380 | | | | 18,057 | | | | 19,159 | | | | 19,605 | | | | 78,201 | |
| Third-party | | | 26,160 | | | | 30,396 | | | | 32,609 | | | | 29,582 | | | | 118,747 | | | | | 22,620 | | | | 26,662 | | | | 25,542 | | | | 22,483 | | | | 97,307 | |
| Operating and maintenance expense: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | 11,737 | | | | 8,907 | | | | 10,576 | | | | 14,974 | | | | 46,194 | | | | | 15,686 | | | | 13,401 | | | | 10,681 | | | | 13,859 | | | | 53,627 | |
| Third-party | | | 19,637 | | | | 20,620 | | | | 22,125 | | | | 21,183 | | | | 83,565 | | | | | 21,100 | | | | 28,167 | | | | 26,888 | | | | 25,432 | | | | 101,587 | |
| Depreciation, amortization and accretion | | | 10,631 | | | | 10,601 | | | | 10,569 | | | | 10,778 | | | | 42,579 | | | | | 10,714 | | | | 10,852 | | | | 10,944 | | | | 11,182 | | | | 43,692 | |
| General and administrative expense: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | 7,841 | | | | 7,165 | | | | 7,277 | | | | 11,482 | | | | 33,765 | | | | | 7,281 | | | | 9,227 | | | | 7,730 | | | | 10,057 | | | | 34,295 | |
| Third-party | | | 645 | | | | 242 | | | | 1,061 | | | | 902 | | | | 2,850 | | | | | 1,305 | | | | 950 | | | | 1,038 | | | | 1,852 | | | | 5,145 | |
| Taxes other than income | | | 2,377 | | | | 1,894 | | | | 2,170 | | | | 2,005 | | | | 8,446 | | | | | 2,283 | | | | 1,757 | | | | 2,352 | | | | 2,569 | | | | 8,961 | |
| Other | | | 237 | | | | 127 | | | | 945 | | | | (679 | ) | | | 630 | | | | | (3,643 | ) | | | 328 | | | | 90 | | | | 752 | | | | (2,473 | ) |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total costs and expenses | | | 92,274 | | | | 89,301 | | | | 99,216 | | | | 114,765 | | | | 395,556 | | | | | 98,726 | | | | 109,401 | | | | 104,424 | | | | 107,791 | | | | 420,342 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating income | | | 26,998 | | | | 30,955 | | | | 33,124 | | | | 28,339 | | | | 119,416 | | | | | 34,009 | | | | 31,785 | | | | 42,158 | | | | 35,116 | | | | 143,068 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity earnings — Discovery | | | 2,212 | | | | 691 | | | | 66 | | | | 5,362 | | | | 8,331 | | | | | 3,781 | | | | 2,347 | | | | 4,055 | | | | 1,850 | | | | 12,033 | |
| Interest expense: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | (2,805 | ) | | | (2,812 | ) | | | (1,822 | ) | | | (22 | ) | | | (7,461 | ) | | | | (15 | ) | | | (15 | ) | | | (15 | ) | | | (44 | ) | | | (89 | ) |
| Third-party | | | (199 | ) | | | (170 | ) | | | (192 | ) | | | (216 | ) | | | (777 | ) | | | | (221 | ) | | | (633 | ) | | | (3,256 | ) | | | (5,634 | ) | | | (9,744 | ) |
| Interest income | | | — | | | | — | | | | 76 | | | | 89 | | | | 165 | | | | | 70 | | | | 110 | | | | 462 | | | | 958 | | | | 1,600 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income before cumulative effect of change in accounting principle | | | 26,206 | | | | 28,664 | | | | 31,252 | | | | 33,552 | | | | 119,674 | | | | | 37,624 | | | | 33,594 | | | | 43,404 | | | | 32,246 | | | | 146,868 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cumulative effect of change in accounting principle | | | — | | | | — | | | | — | | | | (1,322 | ) | | | (1,322 | ) | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income | | $ | 26,206 | | | $ | 28,664 | | | $ | 31,252 | | | $ | 32,230 | | | $ | 118,352 | | | | $ | 37,624 | | | $ | 33,594 | | | $ | 43,404 | | | $ | 32,246 | | | $ | 146,868 | |
| | | | | | |
| | |
| * | | Because Four Corners was an affiliate of Williams at the time of the acquisition, the transaction was between entities under common control, and has been accounted for at historical cost. Accordingly, these tables have been restated to reflect the historical results of Four Corners throughout the periods presented. |
Segment Profit & Operating Statistics
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2005* | | | | 2006* | |
| (Thousands) | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Y-T-D | | | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Y-T-D | |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gathering and Processing — West | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment revenues | | $ | 107,903 | | | $ | 108,080 | | | $ | 120,164 | | | $ | 127,056 | | | $ | 463,203 | | | | $ | 115,672 | | | $ | 127,794 | | | $ | 132,603 | | | $ | 126,244 | | | $ | 502,313 | |
| Product cost | | | 36,434 | | | | 36,418 | | | | 42,235 | | | | 50,619 | | | | 165,706 | | | | | 38,277 | | | | 41,800 | | | | 41,821 | | | | 38,099 | | | | 159,997 | |
| Operating and maintenance expense | | | 25,646 | | | | 26,735 | | | | 24,429 | | | | 27,838 | | | | 104,648 | | | | | 29,095 | | | | 34,525 | | | | 29,950 | | | | 31,193 | | | | 124,763 | |
| Depreciation, amortization and accretion | | | 9,726 | | | | 9,708 | | | | 9,673 | | | | 9,853 | | | | 38,960 | | | | | 9,814 | | | | 9,952 | | | | 10,035 | | | | 10,254 | | | | 40,055 | |
| Direct general and administrative expenses | | | 3,240 | | | | 2,522 | | | | 3,117 | | | | 3,351 | | | | 12,230 | | | | | 3,400 | | | | 2,361 | | | | 2,838 | | | | 3,321 | | | | 11,920 | |
| Other, net | | | 2,422 | | | | 1,875 | | | | 2,921 | | | | 1,164 | | | | 8,382 | | | | | (1,567 | ) | | | 1,919 | | | | 2,260 | | | | 3,157 | | | | 5,769 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment profit | | $ | 30,435 | | | $ | 30,822 | | | $ | 37,789 | | | $ | 34,231 | | | $ | 133,277 | | | | $ | 36,653 | | | $ | 37,237 | | | $ | 45,699 | | | $ | 40,220 | | | $ | 159,809 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gathering and Processing — Gulf | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment revenues | | $ | 880 | | | $ | 765 | | | $ | 650 | | | $ | 1,220 | | | $ | 3,515 | | | | $ | 733 | | | $ | 676 | | | $ | 632 | | | $ | 615 | | | $ | 2,656 | |
| Operating and maintenance expense | | | 107 | | | | 269 | | | | 101 | | | | 237 | | | | 714 | | | | | 242 | | | | 231 | | | | 399 | | | | 788 | | | | 1,660 | |
| Depreciation and accretion | | | 300 | | | | 300 | | | | 300 | | | | 300 | | | | 1,200 | | | | | 300 | | | | 300 | | | | 300 | | | | 300 | | | | 1,200 | |
| Direct general and administrative expenses | | | — | | | | — | | | | — | | | | 2 | | | | 2 | | | | | 2 | | | | 7 | | | | — | | | | (8 | ) | | | 1 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment operating income (loss) | | | 473 | | | | 196 | | | | 249 | | | | 681 | | | | 1,599 | | | | | 189 | | | | 138 | | | | (67 | ) | | | (465 | ) | | | (205 | ) |
| Equity earnings | | | 2,212 | | | | 691 | | | | 66 | | | | 5,362 | | | | 8,331 | | | | | 3,781 | | | | 2,347 | | | | 4,055 | | | | 1,850 | | | | 12,033 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment profit | | $ | 2,685 | | | $ | 887 | | | $ | 315 | | | $ | 6,043 | | | $ | 9,930 | | | | $ | 3,970 | | | $ | 2,485 | | | $ | 3,988 | | | $ | 1,385 | | | $ | 11,828 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
NGL Services | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment revenues | | $ | 10,489 | | | $ | 11,411 | | | $ | 11,526 | | | $ | 14,828 | | | $ | 48,254 | | | | $ | 16,330 | | | $ | 12,716 | | | $ | 13,347 | | | $ | 16,048 | | | $ | 58,441 | |
| Operating and maintenance expense | | | 5,621 | | | | 2,523 | | | | 8,171 | | | | 8,082 | | | | 24,397 | | | | | 7,449 | | | | 6,812 | | | | 7,220 | | | | 7,310 | | | | 28,791 | |
| Product cost | | | 2,735 | | | | 3,327 | | | | 2,258 | | | | 3,501 | | | | 11,821 | | | | | 5,723 | | | | 2,919 | | | | 2,880 | | | | 3,989 | | | | 15,511 | |
| Depreciation and accretion | | | 605 | | | | 593 | | | | 596 | | | | 625 | | | | 2,419 | | | | | 600 | | | | 600 | | | | 609 | | | | 628 | | | | 2,437 | |
| Direct general and administrative expenses | | | 203 | | | | 271 | | | | 308 | | | | 286 | | | | 1,068 | | | | | 301 | | | | 235 | | | | 279 | | | | 334 | | | | 1,149 | |
| Other, net | | | 192 | | | | 146 | | | | 194 | | | | 162 | | | | 694 | | | | | 207 | | | | 166 | | | | 182 | | | | 164 | | | | 719 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment profit | | $ | 1,133 | | | $ | 4,551 | | | $ | (1 | ) | | $ | 2,172 | | | $ | 7,855 | | | | $ | 2,050 | | | $ | 1,984 | | | $ | 2,177 | | | $ | 3,623 | | | $ | 9,834 | |
| | | | | | |
| | |
| * | | Because Four Corners was an affiliate of Williams at the time of the acquisition, the transaction was between entities under common control, and has been accounted for at historical cost. Accordingly, these tables have been restated to reflect the historical results of Four Corners throughout the periods presented. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Information: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Williams Partners: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Conway storage revenues | | $ | 4,388 | | | $ | 4,638 | | | $ | 5,409 | | | $ | 5,855 | | | $ | 20,290 | | | | $ | 5,105 | | | $ | 5,924 | | | $ | 6,581 | | | $ | 7,627 | | | $ | 25,237 | |
| Conway fractionation volumes (bpd) — our 50% | | | 41,296 | | | | 37,503 | | | | 34,511 | | | | 46,550 | | | | 39,965 | | | | | 46,042 | | | | 39,669 | | | | 38,517 | | | | 31,374 | | | | 38,859 | |
| Carbonate Trend gathered volumes (MMBtu/d) | | | 41,567 | | | | 35,933 | | | | 29,834 | | | | 35,218 | | | | 35,605 | | | | | 33,407 | | | | 29,327 | | | | 27,650 | | | | 26,995 | | | | 29,323 | |
| Williams Four Corners — 100%: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gathered volumes (MMBtu/d) | | | 1,512,489 | | | | 1,526,251 | | | | 1,538,105 | | | | 1,509,109 | | | | 1,521,507 | | | | | 1,511,867 | | | | 1,473,371 | | | | 1,501,978 | | | | 1,512,304 | | | | 1,499,937 | |
| Processed volumes (MMBtu/d) | | | 857,867 | | | | 854,321 | | | | 872,261 | | | | 870,076 | | | | 863,693 | | | | | 868,200 | | | | 861,876 | | | | 878,965 | | | | 893,022 | | | | 875,600 | |
| Liquid sales gallons (000s) | | | 45,740 | | | | 38,472 | | | | 42,185 | | | | 39,082 | | | | 165,479 | | | | | 41,413 | | | | 43,874 | | | | 47,009 | | | | 49,714 | | | | 182,010 | |
| Net liquids margin (cents/gallon) | | $ | 0.32 | | | $ | 0.33 | | | $ | 0.42 | | | $ | 0.40 | | | $ | 0.37 | | | | $ | 0.37 | | | $ | 0.49 | | | $ | 0.56 | | | $ | 0.45 | | | $ | 0.47 | |
| Discovery Producer Services — 100% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gathered volumes (MMBtu/d) | | | 335,727 | | | | 334,466 | | | | 249,722 | | | | 460,160 | | | | 345,098 | | | | | 581,788 | | | | 342,037 | | | | 435,885 | | | | 514,486 | | | | 467,338 | |
| Gross processing margin ($/MMBtu) | | $ | 0.21 | | | $ | 0.17 | | | $ | 0.19 | | | $ | 0.18 | | | $ | 0.19 | | | | $ | 0.16 | | | $ | 0.25 | | | $ | 0.28 | | | $ | 0.25 | | | $ | 0.23 | |
