Exhibit 99.1
Date:Nov. 1, 2007
Williams Partners L.P. Reports Third-Quarter 2007 Financial Results
| | • | | Four Corners Acquisition, Steady Operational Performance Drive Strong Increase in Distributable Cash Flow per Unit |
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| | • | | Four Corners NGL Margins, Higher Conway Revenue, Higher Discovery Equity Earnings Highlight 3Q Performance |
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| | • | | Cash Distribution Increased to 55 Cents |
TULSA, Okla. — Williams Partners L.P. (NYSE:WPZ) today announced unaudited third-quarter 2007 net income of $29.4 million, or 62 cents per common unit, compared with third-quarter 2006 net income of $45.4 million and 58 cents per common unit.
Year-to-date through Sept. 30, Williams Partners reported net income of $69.4 million, or $1.41 per common unit, compared with $119.7 million and $1.19 cents per common unit for the same time frame last year.
The third-quarter and year-to-date 2007 results were lower than the restated 2006 results due primarily to interest expense associated with the Four Corners acquisition. No interest expense had been allocated to these assets when they were held by Williams (NYSE: WMB).
Distributable cash flow for limited-partner unitholders totaled $28.5 million for the third quarter of 2007, compared with $13.5 million for the same period in 2006. The key measure of distributable cash flow per weighted-average limited partner unit was 72 cents in third-quarter 2007, compared with 62 cents for third-quarter 2006, an increase of 16 percent.
The increase in distributable cash flow for the quarter is due to the growth of the partnership through its 2006 acquisition of Four Corners and the partnership’s steady financial performance.
Year-to-date through Sept. 30, distributable cash flow for limited-partner unitholders totaled $77 million, compared with $26.7 million for 2006. Also during the first nine months of 2007, distributable cash flow per weighted-average limited partner unit was $1.96, compared with $1.53 for 2006, an increase of 28 percent.
Recurring Segment Profit Results
Consolidated recurring segment profit for Williams Partners for third-quarter 2007 was $54.9 million, compared with $55.9 million for third-quarter 2006.
Recurring segment profit for Gathering & Processing — West, which includes Four Corners, was $43.2 million in third-quarter 2007, compared with $47.7 million in 2006. The decline in recurring segment profit was
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| Williams Partners L.P. (NYSE:WPZ) — 3Q 2007 Financial Results — Nov. 1, 2007 | | Page 1 of 4 |
primarily the result of $3.7 million higher net product imbalance losses at Four Corners. Gains and losses from product imbalances are an unpredictable component of operating costs.
Recurring segment profit for the NGL Services segment improved significantly for the third-quarter. Its third-quarter recurring segment profit was $4 million, compared with $2.2 million in 2006. Lower operating costs, including $1 million lower losses on cavern empties, and increased storage and product upgrade revenue at Conway drove the quarterly improvement. Gains and losses on cavern empties are an unpredictable component of operating costs.
Equity earnings from the partnership’s 60 percent interest in Discovery were $1.8 million higher in the third quarter, due primarily to higher NGL sales volumes.
For the nine-month period ending Sept. 30, consolidated recurring segment profit for Williams Partners was $139.5 million, compared with $133.8 million for the first nine months of 2006.
Gathering & Processing — West reported recurring segment profit of $113.4 million in the first nine months of 2007, compared with $112.1 million for 2006. Nine percent higher NGL margins, which were partially offset by higher operating expenses, drove the slight improvement in the year-to-date results.
Year-to-date through Sept. 30, NGL Services reported recurring segment profit of $11.1 million, compared with $6.2 million for the same period in 2006. The segment benefited from lower operating costs and higher storage revenue, due to higher demand, at Conway. These gains were partially offset by lower fractionation revenues.
Reconciliations of the partnership’s distributable cash flow for limited-partner unitholders to net income, as well as recurring segment profit to segment profit, accompany this press release.
Chief Operating Officer Perspective
“Our growing portfolio of assets continues to deliver steady performance,” said Alan Armstrong, chief operating officer of the general partner of Williams Partners. “We’ve increased cash distributions to unitholders for seven consecutive quarters, distributable cash flow per unit is up nearly 30 percent year to date, and our distribution coverage ratio continues to be strong.
“Gathering volumes at Four Corners are responding positively to our well-connect program, Discovery continues to capture new business and Conway’s storage revenues and distributable cash flow continues to increase,” Armstrong said.
Increase in Cash Distribution to Unitholders
Subsequent to the close of the third quarter, the board of directors of the general partner of Williams Partners increased the quarterly cash distribution payable to unitholders to 55 cents from 52.5 cents. This was the seventh consecutive quarter the partnership increased its cash distribution.
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| Williams Partners L.P. (NYSE:WPZ) — 3Q 2007 Financial Results — Nov. 1, 2007 | | Page 2 of 4 |
Distributable Cash Flow and Recurring Segment Profit Definitions
Distributable cash flow per weighted average limited-partner unit is a key measure of the partnership’s financial performance and available cash flows to unitholders.
Williams Partners defines distributable cash flow per limited partner unit as distributable cash flow, as defined in the following paragraph, attributable to partnership operations plus the cash distributed by Discovery. The total distributable cash flow attributable to partnership operations is then allocated among 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.
Williams Partners defines distributable cash flow as net income plus 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.
Williams Partners defines recurring segment profit as segment profit excluding items of income or loss that it characterizes as unrepresentative of its ongoing operations. Schedules presenting Williams Partners’ consolidated statements of income, segment profit and operating information are available on Williams Partners’ web site atwww.williamslp.com and as an attachment to this document.
Today’s Analyst Call
Williams Partners’ management will discuss the partnership’s third-quarter 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 viawww.williamslp.com. A limited number of phone lines also will be available at (877) 856-1962. International callers should dial (719) 325-4762. Callers should dial in at least 10 minutes prior to the start of the discussion. Replay of the third-quarter webcast will be available for two weeks atwww.williamslp.com.
Form 10-Q
The partnership plans to file its Form 10-Q with the Securities and Exchange Commission today. 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 publicly traded master limited partnership that owns natural gas gathering, transportation, processing and treating assets serving regions where producers require large scale and highly reliable services, including the Gulf of Mexico and the San Juan Basin in New Mexico and Colorado. The partnership also serves the natural gas liquids (NGL) market through its NGL fractionating and storage assets.
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| Williams Partners L.P. (NYSE:WPZ) — 3Q 2007 Financial Results — Nov. 1, 2007 | | Page 3 of 4 |
The general partner is Williams Partners GP LLC. More information about the partnership is available atwww.williamslp.com.
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Contact: | | Jeff Pounds |
| | | Williams (media relations) |
| | | (918) 573-3332 |
| | | |
| | | Sharna Reingold |
| | | Williams (investor relations) |
| | | (918) 573-2078 |
# # #
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; any decrease in supplies of natural gas could adversely affect Williams Partners’ business and operating results; 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 Companies 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’ annual report on Form 10-K filed with the Securities and Exchange Commission on Feb. 28, 2007, and Williams Partners’ quarterly reports on Form 10-Q available from Williams Partners’ offices or from Williams Partners’ website at www.williamslp.com.
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| Williams Partners L.P. (NYSE:WPZ) — 3Q 2007 Financial Results — Nov. 1, 2007 | | Page 4 of 4 |
Reconciliation of Non-GAAP Measures
(UNAUDITED)
This press release includes certain financial measures, Recurring Segment Profit, 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., Recurring Segment Profit excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Management believes Recurring Segment Profit provides investors meaningful insight into Williams Partners L.P.’s results from ongoing operations.
For Williams Partners L.P. we define Distributable Cash Flow as net income (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 60%.
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 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 Recurring 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 (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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| | | 2006* | | | 2007 |
| (Thousands, except per-unit amounts) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | Y-T-D | | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | Y-T-D |
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Williams Partners L.P.
Reconciliation of Non-GAAP “Recurring Segment Profit” to GAAP “Segment Profit” | | | | | | | | | | | | | | | | | |
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| Gathering and Processing — West | | $ | 36,653 | | | $ | 37,237 | | | $ | 45,699 | | | $ | 119,589 | | | | $ | 31,276 | | | $ | 38,623 | | | $ | 41,160 | | | $ | 111,059 | |
| Gathering and Processing — Gulf | | | 5,860 | | | | 3,659 | | | | 6,016 | | | | 15,535 | | | | | 3,638 | | | | 3,670 | | | | 7,676 | | | | 14,984 | |
| NGL Services | | | 2,050 | | | | 1,984 | | | | 2,177 | | | | 6,211 | | | | | 53 | | | | 5,606 | | | | 3,957 | | | | 9,616 | |
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| Segment Profit | | | 44,563 | | | | 42,880 | | | | 53,892 | | | | 141,335 | | | | | 34,967 | | | | 47,899 | | | | 52,793 | | | | 135,659 | |
| Non-recurring Items: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gathering and Processing — West | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2001-2002 EFM fees adjustment, revenue effect | | | — | | | | — | | | | — | | | | — | | | | | — | | | | — | | | | 3,464 | | | | 3,464 | |
| 2001-2002 EFM fees adjustment, depreciation effect | | | — | | | | — | | | | — | | | | — | | | | | — | | | | — | | | | (1,356 | ) | | | (1,356 | ) |
| Condensate revenue adjustment | | | — | | | | (1,900 | ) | | | — | | | | (1,900 | ) | | | | — | | | | — | | | | — | | | | — | |
| 2005-2006 retroactive charges for customer contract | | | — | | | | — | | | | — | | | | — | | | | | (848 | ) | | | — | | | | — | | | | (848 | ) |
| Adjust right-of-way prepaid expense | | | — | | | | — | | | | — | | | | — | | | | | 1,243 | | | | — | | | | — | | | | 1,243 | |
| Adjust 2006 incentive compensation accrual | | | — | | | | — | | | | — | | | | — | | | | | (899 | ) | | | — | | | | — | | | | (899 | ) |
| Adjust asset retirement obligation | | | — | | | | — | | | | — | | | | — | | | | | 785 | | | | — | | | | — | | | | 785 | |
| Adjust other accounts payable items | | | (3,300 | ) | | | (700 | ) | | | 2,000 | | | | (2,000 | ) | | | | — | | | | — | | | | — | | | | — | |
| NGL Services | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Product imbalance valuation adjustment | | | — | | | | — | | | | — | | | | — | | | | | 1,437 | | | | — | | | | — | | | | 1,437 | |
| Other items: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gathering and Processing — West | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gain on sale of LaMaquina treating facility | | | (3,619 | ) | | | — | | | | — | | | | (3,619 | ) | | | | — | | | | — | | | | — | | | | — | |
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| Recurring Segment Profit | | $ | 37,644 | | | $ | 40,280 | | | $ | 55,892 | | | $ | 133,816 | | | | $ | 36,685 | | | $ | 47,899 | | | $ | 54,901 | | | $ | 139,485 | |
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| * Because Four Corners and the additional 20% interest in Discovery were affiliates of Williams at the time of these acquisitions, the transactions were between entities under common control, and have been accounted for at historical cost. Accordingly, these tables have been restated to reflect the historical results of Four Corners and Equity Earnings in Discovery throughout the periods presented. |
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| | | 2006* | | | 2007 |
| (Thousands, except per-unit amounts) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | Y-T-D | | | 1st Qtr | | 2nd Qtr | | 3rd 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 | | $ | 39,514 | | | $ | 34,768 | | | $ | 45,432 | | | $ | 119,714 | | | | $ | 13,809 | | | $ | 26,184 | | | $ | 29,429 | | | $ | 69,422 | |
| Depreciation, amortization and accretion | | | 10,714 | | | | 10,852 | | | | 10,944 | | | | 32,510 | | | | | 13,178 | | | | 11,234 | | | | 10,345 | | | | 34,757 | |
| Amortization of natural gas purchase contract | | | 1,354 | | | | 1,322 | | | | 1,322 | | | | 3,998 | | | | | 1,188 | | | | 1,189 | | | | 1,189 | | | | 3,566 | |
| Non-cash amortization of debt issuance costs included in interest expense | | | — | | | | — | | | | — | | | | — | | | | | 404 | | | | 403 | | | | 404 | | | | 1,211 | |
| Equity earnings — Discovery | | | (5,671 | ) | | | (3,521 | ) | | | (6,083 | ) | | | (15,275 | ) | | | | (3,931 | ) | | | (3,875 | ) | | | (7,902 | ) | | | (15,708 | ) |
| Reimbursements from Williams under omnibus agreement | | | 1,248 | | | | 1,183 | | | | 1,813 | | | | 4,244 | | | | | 842 | | | | 825 | | | | 1,059 | | | | 2,726 | |
| Non-cash adjustment of 2001-2002 EFM revenue | | | — | | | | — | | | | — | | | | — | | | | | — | | | | — | | | | 3,464 | | | | 3,464 | |
Maintenance capital expenditures(a)(b) | | | (5,838 | ) | | | (5,371 | ) | | | (5,305 | ) | | | (16,514 | ) | | | | (7,621 | ) | | | (8,665 | ) | | | (3,524 | ) | | | (19,810 | ) |
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| Distributable Cash Flow Excluding Equity Investments | | $ | 41,321 | | | $ | 39,233 | | | $ | 48,123 | | | $ | 128,677 | | | | $ | 17,869 | | | $ | 27,295 | | | $ | 34,464 | | | $ | 79,628 | |
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| Less: Pre-partnership Four Corners net income allocated to general partner | | | (33,415 | ) | | | (30,624 | ) | | | (31,445 | ) | | | (95,484 | ) | | | | — | | | | — | | | | — | | | | — | |
| Less: Pre-partnership Four Corners depreciation, amortization and accretion expense | | | (9,814 | ) | | | (9,666 | ) | | | (7,517 | ) | | | (26,997 | ) | | | | — | | | | — | | | | — | | | | — | |
| Plus: Pre-partnership Four Corners maintenance capital expenditures | | | 4,673 | | | | 4,116 | | | | 3,368 | | | | 12,157 | | | | | — | | | | — | | | | — | | | | — | |
| Plus: Discovery’s cash distributions to Williams Partners L.P. | | | 4,400 | | | | 3,600 | | | | 4,000 | | | | 12,000 | | | | | 3,600 | | | | 10,869 | | | | 3,600 | | | | 18,069 | |
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| Distributable cash flow attributable to partnership operations | | | 7,165 | | | | 6,659 | | | | 16,529 | | | | 30,353 | | | | | 21,469 | | | | 38,164 | | | | 38,064 | | | | 97,697 | |
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| Distributable Cash Flow attributable to partnership operations allocable to general partner | | | 410 | | | | 201 | | | | 3,066 | | | | 3,677 | | | | | 1,487 | | | | 9,607 | | | | 9,557 | | | | 20,651 | |
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| Distributable Cash Flow attributable to limited partnership operations allocable to limited partners | | $ | 6,755 | | | $ | 6,458 | | | $ | 13,463 | | | $ | 26,676 | | | | $ | 19,982 | | | $ | 28,557 | | | $ | 28,507 | | | $ | 77,046 | |
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| Weighted average number of units outstanding: | | | 14,006,146 | | | | 14,923,619 | | | | 21,597,072 | | | | 16,870,084 | | | | | 39,358,798 | | | | 39,358,798 | | | | 39,359,555 | | | | 39,359,053 | |
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| Distributable Cash Flow attributable to partnership operations per limited partner unit: | | $ | 0.48 | | | $ | 0.43 | | | $ | 0.62 | | | $ | 1.53 | | | | $ | 0.51 | | | $ | 0.73 | | | $ | 0.72 | | | $ | 1.96 | |
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| (a) Maintenance capital expenditures includes certain well connection capital. | | | | | | | | | | | | | | | | | |
| (b) Prior-period maintenance capital expenditures have been adjusted to exclude certain efficiency (cost-reduction) type 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 | | $ | 9,452 | | | $ | 5,868 | | | $ | 10,138 | | | $ | 25,458 | | | | $ | 6,551 | | | $ | 6,460 | | | $ | 13,168 | | | $ | 26,179 | |
| Depreciation and accretion | | | 6,379 | | | | 6,374 | | | | 6,380 | | | | 19,133 | | | | | 6,483 | | | | 6,508 | | | | 6,243 | | | | 19,234 | |
| Maintenance capital expenditures | | | (516 | ) | | | (506 | ) | | | (262 | ) | | | (1,284 | ) | | | | (429 | ) | | | (595 | ) | | | (1,560 | ) | | | (2,584 | ) |
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| Distributable Cash Flow — 100% | | $ | 15,315 | | | $ | 11,736 | | | $ | 16,256 | | | $ | 43,307 | | | | $ | 12,605 | | | $ | 12,373 | | | $ | 17,851 | | | $ | 42,829 | |
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| Distributable Cash Flow — our 60% interest | | $ | 9,189 | | | $ | 7,042 | | | $ | 9,754 | | | $ | 25,984 | | | | $ | 7,563 | | | $ | 7,424 | | | $ | 10,711 | | | $ | 25,697 | |
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* Because Four Corners and the additional 20% interest in Discovery were affiliates of Williams at the time of these acquisitions, the transactions were between entities under common control, and have been accounted for at historical cost. Accordingly, these tables have been restated to reflect the historical results of Four Corners and Equity Earnings in Discovery throughout the periods presented. |
Consolidated Statements of Income
(UNAUDITED)
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| | | 2006* | | | 2007 |
| (Thousands) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | Y-T-D | | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | Y-T-D |
| | | | |
| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Product sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | $ | 58,396 | | | $ | 63,370 | | | $ | 68,542 | | | $ | 190,308 | | | | $ | 56,552 | | | $ | 62,119 | | | $ | 75,519 | | | $ | 194,190 | |
| Third-party | | | 2,792 | | | | 7,766 | | | | 4,553 | | | | 15,111 | | | | | 6,313 | | | | 5,070 | | | | 4,297 | | | | 15,680 | |
| Gathering and processing: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | 9,933 | | | | 10,756 | | | | 10,162 | | | | 30,851 | | | | | 9,491 | | | | 8,743 | | | | 9,178 | | | | 27,412 | |
| Third-party | | | 51,376 | | | | 49,405 | | | | 52,679 | | | | 153,460 | | | | | 51,103 | | | | 51,422 | | | | 51,721 | | | | 154,246 | |
| Storage | | | 5,105 | | | | 5,924 | | | | 6,581 | | | | 17,610 | | | | | 6,410 | | | | 6,818 | | | | 7,404 | | | | 20,632 | |
| Fractionation | | | 3,953 | | | | 2,989 | | | | 2,708 | | | | 9,650 | | | | | 1,917 | | | | 2,616 | | | | 2,723 | | | | 7,256 | |
| Other | | | 1,180 | | | | 976 | | | | 1,357 | | | | 3,513 | | | | | 2,029 | | | | 2,481 | | | | (1,266 | ) | | | 3,244 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total revenues | | | 132,735 | | | | 141,186 | | | | 146,582 | | | | 420,503 | | | | | 133,815 | | | | 139,269 | | | | 149,576 | | | | 422,660 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cost and expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Product cost and shrink replacement: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | 21,380 | | | | 18,057 | | | | 19,159 | | | | 58,596 | | | | | 21,725 | | | | 18,520 | | | | 18,806 | | | | 59,051 | |
| Third-party | | | 22,620 | | | | 26,662 | | | | 25,542 | | | | 74,824 | | | | | 20,470 | | | | 26,157 | | | | 30,043 | | | | 76,670 | |
| Operating and maintenance expense: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | 15,686 | | | | 13,401 | | | | 10,681 | | | | 39,768 | | | | | 14,328 | | | | 10,484 | | | | 15,275 | | | | 40,087 | |
| Third-party | | | 21,100 | | | | 28,167 | | | | 26,888 | | | | 76,155 | | | | | 28,185 | | | | 23,759 | | | | 25,259 | | | | 77,203 | |
| Depreciation, amortization and accretion | | | 10,714 | | | | 10,852 | | | | 10,944 | | | | 32,510 | | | | | 13,178 | | | | 11,234 | | | | 10,345 | | | | 34,757 | |
| General and administrative expense: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | 7,281 | | | | 9,227 | | | | 7,730 | | | | 24,238 | | | | | 9,406 | | | | 9,644 | | | | 10,816 | | | | 29,866 | |
| Third-party | | | 1,305 | | | | 950 | | | | 1,038 | | | | 3,293 | | | | | 664 | | | | 1,189 | | | | 925 | | | | 2,778 | |
| Taxes other than income | | | 2,283 | | | | 1,757 | | | | 2,352 | | | | 6,392 | | | | | 2,114 | | | | 2,626 | | | | 2,474 | | | | 7,214 | |
| Other | | | (3,643 | ) | | | 328 | | | | 90 | | | | (3,225 | ) | | | | 460 | | | | 198 | | | | 134 | | | | 792 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total costs and expenses | | | 98,726 | | | | 109,401 | | | | 104,424 | | | | 312,551 | | | | | 110,530 | | | | 103,811 | | | | 114,077 | | | | 328,418 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating income | | | 34,009 | | | | 31,785 | �� | | | 42,158 | | | | 107,952 | | | | | 23,285 | | | | 35,458 | | | | 35,499 | | | | 94,242 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity earnings — Discovery | | | 5,671 | | | | 3,521 | | | | 6,083 | | | | 15,275 | | | | | 3,931 | | | | 3,875 | | | | 7,902 | | | | 15,708 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest expense: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | (15 | ) | | | (15 | ) | | | (15 | ) | | | (45 | ) | | | | (15 | ) | | | (15 | ) | | | (16 | ) | | | (46 | ) |
| Third-party | | | (221 | ) | | | (633 | ) | | | (3,256 | ) | | | (4,110 | ) | | | | (14,375 | ) | | | (14,395 | ) | | | (14,268 | ) | | | (43,038 | ) |
| Interest income | | | 70 | | | | 110 | | | | 462 | | | | 642 | | | | | 983 | | | | 1,261 | | | | 312 | | | | 2,556 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income | | $ | 39,514 | | | $ | 34,768 | | | $ | 45,432 | | | $ | 119,714 | | | | $ | 13,809 | | | $ | 26,184 | | | $ | 29,429 | | | $ | 69,422 | |
| | | | | | |
* Because Four Corners and the additional 20% interest in Discovery were affiliates of Williams at the time of these acquisitions, the transactions were between entities under common control, and have been accounted for at historical cost. Accordingly, these tables have been restated to reflect the historical results of Four Corners and Equity Earnings in Discovery throughout the periods presented.
Segment Profit & Operating Statistics
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2006* | | | 2007 |
| (Thousands) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | Y-T-D | | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | Y-T-D |
| | | | |
Gathering and Processing — West | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment revenues | | $ | 115,672 | | | $ | 127,794 | | | $ | 132,603 | | | $ | 376,069 | | | | $ | 120,428 | | | $ | 125,047 | | | $ | 134,035 | | | $ | 379,510 | |
| Product cost | | | 38,277 | | | | 41,800 | | | | 41,821 | | | | 121,898 | | | | | 39,675 | | | | 42,313 | | | | 45,791 | | | | 127,779 | |
| Operating and maintenance expense | | | 29,095 | | | | 34,525 | | | | 29,950 | | | | 93,570 | | | | | 33,097 | | | | 29,487 | | | | 34,267 | | | | 96,851 | |
| Depreciation, amortization and accretion | | | 9,814 | | | | 9,952 | | | | 10,035 | | | | 29,801 | | | | | 12,175 | | | | 10,203 | | | | 8,564 | | | | 30,942 | |
| Direct general and administrative expenses | | | 3,400 | | | | 2,361 | | | | 2,838 | | | | 8,599 | | | | | 1,821 | | | | 1,797 | | | | 1,839 | | | | 5,457 | |
| Other, net | | | (1,567 | ) | | | 1,919 | | | | 2,260 | | | | 2,612 | | | | | 2,384 | | | | 2,624 | | | | 2,414 | | | | 7,422 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment profit | | $ | 36,653 | | | $ | 37,237 | | | $ | 45,699 | | | $ | 119,589 | | | | $ | 31,276 | | | $ | 38,623 | | | $ | 41,160 | | | $ | 111,059 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gathering and Processing — Gulf | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment revenues | | $ | 733 | | | $ | 676 | | | $ | 632 | | | $ | 2,041 | | | | $ | 561 | | | $ | 459 | | | $ | 521 | | | $ | 1,541 | |
| Operating and maintenance expense | | | 242 | | | | 231 | | | | 399 | | | | 872 | | | | | 550 | | | | 361 | | | | 443 | | | | 1,354 | |
| Depreciation and accretion | | | 300 | | | | 300 | | | | 300 | | | | 900 | | | | | 304 | | | | 303 | | | | 304 | | | | 911 | |
| Direct general and administrative expenses | | | 2 | | | | 7 | | | | — | | | | 9 | | | | | — | | | | — | | | | — | | | | — | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment operating income (loss) | | | 189 | | | | 138 | | | | (67 | ) | | | 260 | | | | | (293 | ) | | | (205 | ) | | | (226 | ) | | | (724 | ) |
| Equity earnings | | | 5,671 | | | | 3,521 | | | | 6,083 | | | | 15,275 | | | | | 3,931 | | | | 3,875 | | | | 7,902 | | | | 15,708 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment profit | | $ | 5,860 | | | $ | 3,659 | | | $ | 6,016 | | | $ | 15,535 | | | | $ | 3,638 | | | $ | 3,670 | | | $ | 7,676 | | | $ | 14,984 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NGL Services | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment revenues | | $ | 16,330 | | | $ | 12,716 | | | $ | 13,347 | | | $ | 42,393 | | | | $ | 12,826 | | | $ | 13,763 | | | $ | 15,020 | | | $ | 41,609 | |
| Operating and maintenance expense | | | 7,449 | | | | 6,812 | | | | 7,220 | | | | 21,481 | | | | | 8,866 | | | | 4,395 | | | | 5,824 | | | | 19,085 | |
| Product cost | | | 5,723 | | | | 2,919 | | | | 2,880 | | | | 11,522 | | | | | 2,520 | | | | 2,364 | | | | 3,058 | | | | 7,942 | |
| Depreciation and accretion | | | 600 | | | | 600 | | | | 609 | | | | 1,809 | | | | | 699 | | | | 728 | | | | 1,477 | | | | 2,904 | |
| Direct general and administrative expenses | | | 301 | | | | 235 | | | | 279 | | | | 815 | | | | | 498 | | | | 470 | | | | 510 | | | | 1,478 | |
| Other, net | | | 207 | | | | 166 | | | | 182 | | | | 555 | | | | | 190 | | | | 200 | | | | 194 | | | | 584 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment profit | | $ | 2,050 | | | $ | 1,984 | | | $ | 2,177 | | | $ | 6,211 | | | | $ | 53 | | | $ | 5,606 | | | $ | 3,957 | | | $ | 9,616 | |
| | | | | | |
* Because Four Corners and the additional 20% interest in Discovery were affiliates of Williams at the time of these acquisitions, the transactions were between entities under common control, and have been accounted for at historical cost. Accordingly, these tables have been restated to reflect the historical results of Four Corners and Equity Earnings in Discovery throughout the periods presented.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Information: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Williams Partners: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Conway storage revenues | | $ | 5,105 | | | $ | 5,924 | | | $ | 6,581 | | | $ | 17,610 | | | | $ | 6,410 | | | $ | 6,818 | | | $ | 7,404 | | | $ | 20,632 | |
| Conway fractionation volumes (bpd) — our 50% | | | 46,042 | | | | 39,669 | | | | 38,517 | | | | 41,382 | | | | | 31,316 | | | | 36,220 | | | | 35,574 | | | | 34,385 | |
| Carbonate Trend gathered volumes (MMBtu/d) | | | 33,407 | | | | 29,327 | | | | 27,650 | | | | 30,107 | | | | | 25,187 | | | | 19,127 | | | | 22,080 | | | | 22,120 | |
| Williams Four Corners — 100%: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gathered volumes (MMBtu/d) | | | 1,511,867 | | | | 1,473,371 | | | | 1,501,978 | | | | 1,495,771 | | | | | 1,452,694 | | | | 1,461,514 | | | | 1,468,598 | | | | 1,460,993 | |
| Processed volumes (MMBtu/d) | | | 868,200 | | | | 861,876 | | | | 878,965 | | | | 869,731 | | | | | 866,116 | | | | 872,091 | | | | 889,576 | | | | 876,015 | |
| Liquid sales gallons (000s) | | | 41,413 | | | | 43,874 | | | | 47,009 | | | | 132,296 | | | | | 45,603 | | | | 39,031 | | | | 46,098 | | | | 130,732 | |
| Net liquids margin (cents/gallon) | | $ | 0.37 | | | $ | 0.49 | | | $ | 0.56 | | | $ | 0.48 | | | | $ | 0.41 | | | $ | 0.53 | | | $ | 0.63 | | | $ | 0.52 | |
| Discovery Producer Services — 100% | |
| Gathered volumes (MMBtu/d) | | | 581,788 | | | | 342,037 | | | | 435,885 | | | | 451,449 | | | | | 547,504 | | | | 616,172 | | | | 579,588 | | | | 581,205 | |
| Gross processing margin ($/MMBtu) | | $ | 0.16 | | | $ | 0.25 | | | $ | 0.28 | | | $ | 0.22 | | | | $ | 0.23 | | | $ | 0.24 | | | $ | 0.32 | | | $ | 0.27 | |
