Exhibit 99.1
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| News Release | |  |
| NYSE: WPZ | | |
Date:Aug. 7, 2008
Williams Partners L.P. Reports Second-Quarter 2008 Financial Results
| | • | | Per-Unit DCF Up 30% in 2Q |
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| | • | | Net Income Per Unit Up 92% in 2Q |
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| | • | | Higher NGL Margins Continue to Drive Results in Processing Businesses |
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| | • | | Per-Unit Cash Distribution Increased for 10th Consecutive Quarter |
TULSA, Okla. – Williams Partners L.P. (NYSE: WPZ) today announced unaudited second-quarter 2008 net income of $71.8 million, compared with second-quarter 2007 net income of $46.7 million. Net income per limited-partner unit for second-quarter 2008 was $0.92, compared with $0.48 per limited-partner unit for second-quarter 2007.
Year-to-date through June 30, Williams Partners reported net income of $115.5 million, compared with net income of $71.9 million for the first half of 2007. Net income per limited-partner unit for the first half of 2008 was $1.58, compared with $0.79 per limited-partner unit for the same time period last year.
Higher natural gas liquid (NGL) margins at Wamsutter, Four Corners and Discovery were the key drivers of the improved earnings during the second-quarter and year-to-date periods.
Higher operational and maintenance expenses at Four Corners and Conway partially offset these benefits in the second quarter. For the year-to-date period, higher operational and maintenance expenses at Four Corners, lower first-quarter 2008 gathering and processing volumes and higher interest expense due to the Wamsutter acquisition partially offset these benefits.
In second-quarter 2008, the key measure of distributable cash flow per weighted-average limited partner unit was $0.95, compared with $0.73 for second-quarter 2007 – an increase of 30 percent. Total distributable cash flow in second-quarter 2008 for limited-partner unitholders was $50 million, compared with $28.6 million for second-quarter 2007.
Year-to-date through June 30, distributable cash flow per weighted-average limited partner unit was $1.69, compared with $1.24 for the same time period in 2007 – an increase of 36 percent. Total distributable cash flow for limited-partner unitholders for the first half of 2008 was $88.8 million, compared with $48.5 million for the first half of 2007.
The significant increase in distributable cash flow during second-quarter and year-to-date 2008 periods is due to the partnership’s increased cash distributions from its Wamsutter and Discovery investments and improved results at Four Corners.
For the second quarter, the partnership raised its regular cash distribution to unitholders to $0.625 per unit, making its cash distribution coverage ratio 1.5 for the second quarter. Regular cash distributions to
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| Williams Partners L.P. (NYSE: WPZ) Second-Quarter 2008 Financial Results — Aug. 7, 2008 | | Page 1 of 6 |
unitholders for the first half of 2008 have totaled $1.225 per unit, making the coverage ratio for the first half of the year 1.4. Maintaining a strong cash distribution coverage ratio helps insulate the partnership’s distributions from volatile movements in commodity prices.
Second-quarter and year-to-date 2007 results throughout this release have been recast to reflect the partnership’s 2007 acquisitions of an additional 20 percent of Discovery and a membership interest in the Wamsutter system. Because the acquisitions closed in the last half of 2007, those assets’ first- and second-quarter 2007 net income was allocated to the general partner as pre-partnership income. As result, a higher portion of the partnership’s total net income was allocated to the limited partners in the first six months of 2008, compared with the first six months of 2007.
Chief Operating Officer Perspective
“Williams Partners had an extremely successful second quarter, building on our track record of delivering solid results for our unitholders,” said Alan Armstrong, chief operating officer of the general partner of Williams Partners. “We achieved robust growth in both earnings per unit and our key measure of distributable cash flow per unit.
“Our gathering and processing businesses are performing well, particularly in the West, where volumes have recovered following several challenges in the first quarter,” Armstrong said. “The return to normal volumes enables us to fully benefit from the continued strong NGL margins.”
Business Segment Performance
Business segment performance includes results for the partnership’s three business segments: Gathering and Processing – West, which includes Four Corners and the Wamsutter investment; Gathering and Processing – Gulf, which includes the Discovery investment; and NGL Services, which includes the Conway fractionation and storage complex.
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| Williams Partners L.P. (NYSE: WPZ) Second-Quarter 2008 Financial Results — Aug. 7, 2008 | | Page 2 of 6 |
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| Consolidated Segment Profit | | 2Q | | | | YTD | |
| Amounts in thousands | | 2008 | | | 2007 | | | | 2008 | | | 2007 | |
| Gathering and Processing — West | | $ | 86,778 | | | $ | 59,181 | | | | $ | 137,183 | | | $ | 101,785 | |
| Gathering and Processing — Gulf | | | 8,446 | | | | 3,670 | | | | | 21,957 | | | | 7,308 | |
| NGL Services | | | 3,414 | | | | 5,606 | | | | | 8,955 | | | | 5,659 | |
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| Consolidated Segment Profit | | $ | 98,638 | | | $ | 68,457 | | | | $ | 168,095 | | | $ | 114,752 | |
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Recurring Consolidated Segment Profit* | | | | | | | | | | | | | | | | | |
Amounts in thousands | | | | | | | | | | | | | | | | | |
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| Gathering and Processing — West | | $ | 83,512 | | | $ | 59,181 | | | | $ | 130,852 | | | $ | 102,066 | |
| Gathering and Processing — Gulf | | | 8,446 | | | | 3,670 | | | | | 21,957 | | | | 7,308 | |
| NGL Services | | | 3,414 | | | | 5,606 | | | | | 8,955 | | | | 7,096 | |
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| Recurring Consolidated Segment Profit* | | $ | 95,372 | | | $ | 68,457 | | | | $ | 161,764 | | | $ | 116,470 | |
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| * | | A schedule reconciling segment profit to recurring segment profit is attached to this press release. |
Higher NGL margins were the primary drivers of the second-quarter and year-to-date improvement in the Gathering & Processing – West segment. Higher net product imbalance losses and slightly lower gathering and processing volumes at Four Corners during the first quarter partially offset these benefits in the year-to-date period. Both the lower volumes and higher net product imbalance losses were impacted by severe winter weather conditions and the shutdown of the Ignacio gas processing plant following the Nov. 28, 2007, fire. The Ignacio plant returned to service on Jan. 18.
Higher gross processing margins at Discovery drove the improvement for Gathering and Processing – Gulf in both the second-quarter and year-to-date periods.
The decline in recurring segment profit for NGL Services during the second quarter was due to higher net product imbalance losses at Conway. Gains and losses from product imbalances are an unpredictable component of operating costs. Higher fractionation and storage revenues and lower operating costs drove the improved results for the year-to-date period.
Reconciliations of the partnership’s distributable cash flow for limited-partner unitholders to net income, as well as recurring segment profit to segment profit, are available on Williams Partners’ web site atwww.williamslp.com and as an attachment to this document.
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 Wamsutter and Discovery. The total distributable cash flow attributable to partnership operations is then allocated among the
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| Williams Partners L.P. (NYSE: WPZ) Second-Quarter 2008 Financial Results — Aug. 7, 2008 | | Page 3 of 6 |
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 Wamsutter and 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 second-quarter 2008 financial results during an analyst presentation to be webcast live beginning at 11 a.m. EDT today.
Participants are encouraged to access the webcast atwww.williamslp.com. Slides are available for viewing, downloading and printing.
A limited number of phone lines also will be available at (877) 558-9190. International callers should dial (706) 902-3248. Replays of the second-quarter webcast, in both streaming and downloadable podcast formats, will be available for two weeks atwww.williamslp.com following the event.
Form 10-Q
The partnership will 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, the San Juan Basin in New Mexico and Colorado, and the Washakie Basin in Wyoming. The partnership also serves the natural gas liquids (NGL) market through its NGL fractionating and storage assets. The general partner is Williams Partners GP LLC. More information about the partnership is available atwww.williamslp.com. Go tohttp://www.b2i.us/irpass.asp?BzID=1296&to=ea&s=0 to join our e-mail list.
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| Williams Partners L.P. (NYSE: WPZ) Second-Quarter 2008 Financial Results — Aug. 7, 2008 | | Page 4 of 6 |
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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 distribution following establishment of cash reserves and payment of fees and expenses, including payments to our 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; lower natural gas and oil prices could adversely affect Williams Partners’ fractionation and storage businesses; Williams Partners’ processing, fractionation and storage businesses could be affected by any decrease in natural gas liquids (NGL) prices or a change in NGL prices relative to the price of natural gas; Williams Partners depends on certain key customers and producers for a significant portion of its revenues and supply of natural gas and NGLs 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 NGLs or to treat natural gas, Williams Partners’ revenues and cash available to pay distributions could be adversely affected; Williams Partners does not own all of the interests in Wamsutter LLC (Wamsutter), the Conway fractionator or Discovery Producer Services LLC (Discovery), which could adversely affect Williams Partners’ ability to operate and control these assets in a manner beneficial to it; Williams Partners’ results of storage and fractionation operations are dependent upon the demand for propane and other NGLs and a substantial decrease in this demand could adversely affect Williams Partners’ business and operation results; Discovery and Wamsutter may reduce their cash distributions to Williams Partners in some situations; Discovery’s interstate tariff rates and terms and conditions are subject to review and possible adjustment by federal regulators and are subject to changes in policy by federal regulators, which could have a material adverse effect on Williams Partner’s business and operating results; Williams Partners’ operations are subject to operational hazards and unforeseen interruptions for which it may not be adequately insured; Williams Partners does not operate all of its assets and its reliance on others to operate its assets and to provide other services could adversely affect Williams Partners’ business and operating results. Williams Partners’ partnership agreement limits its general partner’s fiduciary duties to unitholders and restricts the remedies available to unitholders for actions taken by its general partner that might otherwise constitute breaches of fiduciary duty; The Williams Companies, Inc.’s (Williams) public indentures and Williams Partners’ credit facility contain financial and operating restrictions that may limit its access to credit; in addition, Williams Partners’ ability to obtain credit in the future will be affected by Williams’ credit ratings; Williams Partners’ future financial and operating flexibility may be adversely affected by restrictions in Williams Partners’ debt agreements and by its leverage; Williams Partners may not be able to grow or effectively manage growth; Williams Partners has a holding company structure in which its subsidiaries conduct its operations and own its operating assets, which may affect Williams Partners’ ability to make payments on its debt obligations and distributions on its common units; common units held by Williams eligible for future sale may have adverse effects on the price of Williams Partners’ common units; Williams controls Williams Partners’ general partner, which has sole responsibility for conducting Williams Partners’ business and managing its operations; Williams Partners’ general partner and its affiliates have conflicts of interests with Williams Partners and limited fiduciary duties, and they may favor their own interests to the detriment of Williams Partners’ unitholders; even if unitholders are dissatisfied, they currently have little ability to remove Williams Partners’ general partner without its consent. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to
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| Williams Partners L.P. (NYSE: WPZ) Second-Quarter 2008 Financial Results — Aug. 7, 2008 | | Page 5 of 6 |
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 atwww.williamslp.com.
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| Williams Partners L.P. (NYSE: WPZ) Second-Quarter 2008 Financial Results — Aug. 7, 2008 | | Page 6 of 6 |
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 depreciation, amortization and accretion, and the amortization of a natural gas purchase contract, less our earnings from equity investments, 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 our equity investments, Wamsutter and Discovery, we define Distributable Cash Flow as net income (loss) plus depreciation, amortization and accretion and less maintenance capital expenditures. We also adjust for certain non-cash, non-recurring items. Our equity share of Wamsutter’s Distributable Cash Flow is based on the distribution provisions of the Wamsutter LLC Agreement. 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 Wamsutter and 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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| | | 2007* | | 2008 |
| (Thousands, except per-unit amounts) | | 1st Qtr | | 2nd Qtr | | Y-T-D | | 1st Qtr | | 2nd 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 | | $ | 42,604 | | | $ | 59,181 | | | $ | 101,785 | | | $ | 50,405 | | | $ | 86,778 | | | $ | 137,183 | |
| Gathering and Processing — Gulf | | | 3,638 | | | | 3,670 | | | | 7,308 | | | | 13,511 | | | | 8,446 | | | | 21,957 | |
| NGL Services | | | 53 | | | | 5,606 | | | | 5,659 | | | | 5,541 | | | | 3,414 | | | | 8,955 | |
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| Segment Profit | | | 46,295 | | | | 68,457 | | | | 114,752 | | | | 69,457 | | | | 98,638 | | | | 168,095 | |
| Non-recurring Items: | | | | | | | | | | | | | | | | | | | | | | | | |
| Gathering and Processing — West | | | | | | | | | | | | | | | | | | | | | | | | |
| Involuntary conversion gain resulting from Ignacio fire | | | — | | | | — | | | | — | | | | — | | | | (3,266 | ) | | | (3,266 | ) |
| Wamsutter customer contract adjustment included in equity earnings | | | — | | | | — | | | | — | | | | (3,065 | ) | | | — | | | | (3,065 | ) |
| 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 | | | | — | | | | — | | | | — | |
| NGL Services | | | | | | | | | | | | | | | | | | | | | | | | |
| Product imbalance valuation adjustment | | | 1,437 | | | | — | | | | 1,437 | | | | — | | | | — | | | | — | |
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| Recurring Segment Profit | | $ | 48,013 | | | $ | 68,457 | | | $ | 116,470 | | | $ | 66,392 | | | $ | 95,372 | | | $ | 161,764 | |
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| * | | Because Wamsutter 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 recast to reflect the Equity Earnings in Wamsutter and Discovery throughout the periods presented. |
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| | | 2007* | | 2008 |
| (Thousands, except per-unit amounts) | | 1st Qtr | | 2nd Qtr | | Y-T-D | | 1st Qtr | | 2nd Qtr | | Y-T-D |
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Williams Partners L.P. | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Non-GAAP “Distributable Cash Flow per Limited Partner Unit “GAAP “Net income” | | | | | | | | | | | | | | | | | | | | | | | | |
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| Net income | | $ | 25,137 | | | $ | 46,742 | | | $ | 71,879 | | | $ | 43,629 | | | $ | 71,822 | | | $ | 115,451 | |
| Depreciation, amortization and accretion | | | 13,178 | | | | 11,234 | | | | 24,412 | | | | 11,226 | | | | 11,002 | | | | 22,228 | |
| Amortization of natural gas purchase contract | | | 1,188 | | | | 1,189 | | | | 2,377 | | | | — | | | | — | | | | — | |
| Non-cash amortization of debt issuance costs included in interest expense | | | 404 | | | | 403 | | | | 807 | | | | 489 | | | | 459 | | | | 948 | |
| Involuntary conversion gain resulting from Ignacio fire | | | — | | | | — | | | | — | | | | — | | | | (3,266 | ) | | | (3,266 | ) |
| Equity earnings | | | (15,259 | ) | | | (24,433 | ) | | | (39,692 | ) | | | (34,815 | ) | | | (46,050 | ) | | | (80,865 | ) |
| Reimbursements from Williams under omnibus agreement | | | 842 | | | | 825 | | | | 1,667 | | | | 771 | | | | 865 | | | | 1,636 | |
Maintenance capital expenditures(a) | | | (7,621 | ) | | | (8,665 | ) | | | (16,286 | ) | | | (8,534 | ) | | | (2,497 | ) | | | (11,031 | ) |
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| Distributable Cash Flow Excluding Equity Investments | | $ | 17,869 | | | $ | 27,295 | | | $ | 45,164 | | | $ | 12,766 | | | $ | 32,335 | | | $ | 45,101 | |
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| Plus: Wamsutter cash distributions to Williams Partners L.P. | | | — | | | | — | | | | — | | | | 22,704 | | | | 26,603 | | | | 49,307 | |
| Plus: Discovery’s cash distributions to Williams Partners L.P. | | | 3,600 | | | | 10,869 | | | | 14,469 | | | | 16,800 | | | | 15,600 | | | | 32,400 | |
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| Distributable cash flow attributable to partnership operations | | | 21,469 | | | | 38,164 | | | | 59,633 | | | | 52,270 | | | | 74,538 | | | | 126,808 | |
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| Distributable Cash Flow attributable to partnership operations allocable to general partner | | | 1,487 | | | | 9,607 | | | | 11,094 | | | | 13,431 | | | | 24,565 | | | | 37,996 | |
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| Distributable Cash Flow attributable to limited partnership operations allocable to limited partners | | $ | 19,982 | | | $ | 28,557 | | | $ | 48,539 | | | $ | 38,839 | | | $ | 49,973 | | | $ | 88,812 | |
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| Weighted average number of units outstanding: | | | 39,358,798 | | | | 39,358,798 | | | | 39,358,798 | | | | 52,774,728 | | | | 52,774,728 | | | | 52,774,728 | |
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| Distributable Cash Flow attributable to partnership operations per limited partner unit: | | $ | 0.51 | | | $ | 0.73 | | | $ | 1.24 | | | $ | 0.74 | | | $ | 0.95 | | | $ | 1.69 | |
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| (a) Maintenance capital expenditures includes certain well connection capital | | | | | | | | | | | | | | | | | | | | | | | | |
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Wamsutter | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Non-GAAP “Distributable Cash Flow” to GAAP “Net income” | | | | | | | | | | | | | | | | | | | | | | | | |
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| Net income | | $ | 11,328 | | | $ | 20,558 | | | $ | 31,886 | | | $ | 21,194 | | | $ | 37,480 | | | $ | 58,674 | |
| Depreciation, amortization and accretion | | | 4,258 | | | | 4,440 | | | | 8,698 | | | | 5,228 | | | | 5,213 | | | | 10,441 | |
| Maintenance capital expenditures | | | (4,535 | ) | | | (5,763 | ) | | | (10,298 | ) | | | (3,245 | ) | | | (6,258 | ) | | | (9,503 | ) |
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| Distributable Cash Flow — 100% | | $ | 11,051 | | | $ | 19,235 | | | $ | 30,286 | | | $ | 23,177 | | | $ | 36,435 | | | $ | 59,612 | |
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Discovery Producer Services | | | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Non-GAAP “Distributable Cash Flow” to GAAP “Net income” | | | | | | | | | | | | | | | | | | | | | | | | |
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| Net income | | $ | 6,551 | | | $ | 6,460 | | | | 13,011 | | | $ | 22,701 | | | $ | 14,282 | | | | 36,983 | |
| Depreciation, amortization and accretion | | | 6,483 | | | | 6,508 | | | | 12,991 | | | | 6,983 | | | | 6,802 | | | | 13,785 | |
| Maintenance capital expenditures | | | (429 | ) | | | (595 | ) | | | (1,024 | ) | | | (187 | ) | | | (285 | ) | | | (472 | ) |
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| Distributable Cash Flow — 100% | | $ | 12,605 | | | $ | 12,373 | | | $ | 24,978 | | | $ | 29,497 | | | $ | 20,799 | | | $ | 50,296 | |
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| Distributable Cash Flow — our 60% interest | | $ | 7,563 | | | $ | 7,424 | | | $ | 14,987 | | | $ | 17,698 | | | $ | 12,479 | | | $ | 30,178 | |
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| * | | Because Wamsutter 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 recast to reflect the Equity Earnings in Wamsutter and Discovery throughout the periods presented. |
Consolidated Statements of Income
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2007* | | | 2008 |
| (Thousands, except per-unit amounts) | | 1st Qtr | | 2nd Qtr | | Y-T-D | | | 1st Qtr | | 2nd Qtr | | Y-T-D |
| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Product sales: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | $ | 56,552 | | | $ | 62,119 | | | $ | 118,671 | | | | $ | 78,122 | | | $ | 94,134 | | | $ | 172,256 | |
| Third-party | | | 6,313 | | | | 5,070 | | | | 11,383 | | | | | 4,221 | | | | 9,741 | | | | 13,962 | |
| Gathering and processing: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | 9,491 | | | | 8,743 | | | | 18,234 | | | | | 8,790 | | | | 9,847 | | | | 18,637 | |
| Third-party | | | 51,103 | | | | 51,422 | | | | 102,525 | | | | | 46,210 | | | | 49,548 | | | | 95,758 | |
| Storage | | | 6,410 | | | | 6,818 | | | | 13,228 | | | | | 7,333 | | | | 7,102 | | | | 14,435 | |
| Fractionation | | | 1,917 | | | | 2,616 | | | | 4,533 | | | | | 3,292 | | | | 4,804 | | | | 8,096 | |
| Other | | | 2,029 | | | | 2,481 | | | | 4,510 | | | | | 2,394 | | | | 3,069 | | | | 5,463 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total revenues | | | 133,815 | | | | 139,269 | | | | 273,084 | | | | | 150,362 | | | | 178,245 | | | | 328,607 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cost and expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Product cost and shrink replacement: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | 21,725 | | | | 18,520 | | | | 40,245 | | | | | 22,033 | | | | 27,686 | | | | 49,719 | |
| Third-party | | | 20,470 | | | | 26,157 | | | | 46,627 | | | | | 30,065 | | | | 38,323 | | | | 68,388 | |
| Operating and maintenance expense: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | 14,328 | | | | 10,484 | | | | 24,812 | | | | | 23,133 | | | | 16,548 | | | | 39,681 | |
| Third-party | | | 28,185 | | | | 23,759 | | | | 51,944 | | | | | 23,951 | | | | 29,984 | | | | 53,935 | |
| Depreciation, amortization and accretion | | | 13,178 | | | | 11,234 | | | | 24,412 | | | | | 11,226 | | | | 11,002 | | | | 22,228 | |
| General and administrative expense: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | 9,406 | | | | 9,644 | | | | 19,050 | | | | | 9,876 | | | | 12,385 | | | | 22,261 | |
| Third-party | | | 664 | | | | 1,189 | | | | 1,853 | | | | | 928 | | | | 749 | | | | 1,677 | |
| Taxes other than income | | | 2,114 | | | | 2,626 | | | | 4,740 | | | | | 2,505 | | | | 2,167 | | | | 4,672 | |
| Other, net | | | 460 | | | | 198 | | | | 658 | | | | | 333 | | | | (2,811 | ) | | | (2,478 | ) |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total costs and expenses | | | 110,530 | | | | 103,811 | | | | 214,341 | | | | | 124,050 | | | | 136,033 | | | | 260,083 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating income | | | 23,285 | | | | 35,458 | | | | 58,743 | | | | | 26,312 | | | | 42,212 | | | | 68,524 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity earnings — Wamsutter | | | 11,328 | | | | 20,558 | | | | 31,886 | | | | | 21,194 | | | | 37,480 | | | | 58,674 | |
| Equity earnings — Discovery | | | 3,931 | | | | 3,875 | | | | 7,806 | | | | | 13,621 | | | | 8,570 | | | | 22,191 | |
| Interest expense: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Affiliate | | | (15 | ) | | | (15 | ) | | | (30 | ) | | | | (25 | ) | | | (15 | ) | | | (40 | ) |
| Third-party | | | (14,355 | ) | | | (14,359 | ) | | | (28,714 | ) | | | | (17,648 | ) | | | (16,668 | ) | | | (34,316 | ) |
| Interest income | | | 963 | | | | 1,225 | | | | 2,188 | | | | | 175 | | | | 243 | | | | 418 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income | | $ | 25,137 | | | $ | 46,742 | | | $ | 71,879 | | | | $ | 43,629 | | | $ | 71,822 | | | $ | 115,451 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Allocation of net income* | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income | | $ | 25,137 | | | $ | 46,742 | | | $ | 71,879 | | | | $ | 43,629 | | | $ | 71,822 | | | $ | 115,451 | |
| Allocation of net income to general partner | | | 12,912 | | | | 22,417 | | | | 35,329 | | | | | 8,911 | | | | 23,008 | | | | 31,919 | |
| | | | | | |
| Allocation of net income to limited partners | | | 12,225 | | | | 24,325 | | | | 36,550 | | | | | 34,718 | | | | 48,814 | | | | 83,532 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income, per common and subordinated unit | | $ | 0.31 | | | $ | 0.48 | | | $ | 0.79 | | | | $ | 0.66 | | | $ | 0.92 | | | $ | 1.58 | |
| Weighted average number of units outstanding | | | 39,358,798 | | | | 39,358,798 | | | | 39,358,798 | | | | | 52,774,728 | | | | 52,774,728 | | | | 52,774,728 | |
| | |
| * | | Because Wamsutter 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 recast to reflect the Equity Earnings in Wamsutter and Discovery throughout the periods presented. Net income applicable to periods before the acquisitions of these businesses is fully allocated to our general partner, which results in no impact to net income per limited partner unit. |
Segment Profit & Operating Statistics
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2007* | | 2008 |
| (Thousands) | | 1st Qtr | | 2nd Qtr | | Y-T-D | | 1st Qtr | | 2nd Qtr | | Y-T-D |
| | | | | |
Gathering and Processing — West | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment revenues | | $ | 120,428 | | | $ | 125,047 | | | $ | 245,475 | | | $ | 132,333 | | | $ | 158,563 | | | $ | 290,896 | |
| Product cost and shrink replacement | | | 39,675 | | | | 42,313 | | | | 81,988 | | | | 47,446 | | | | 61,144 | | | | 108,590 | |
| Operating and maintenance expense | | | 33,097 | | | | 29,487 | | | | 62,584 | | | | 40,893 | | | | 36,677 | | | | 77,570 | |
| Depreciation, amortization and accretion | | | 12,175 | | | | 10,203 | | | | 22,378 | | | | 10,299 | | | | 10,136 | | | | 20,435 | |
| Direct general and administrative expenses | | | 1,821 | | | | 1,797 | | | | 3,618 | | | | 1,930 | | | | 2,058 | | | | 3,988 | |
| Other, net | | | 2,384 | | | | 2,624 | | | | 5,008 | | | | 2,554 | | | | (750 | ) | | | 1,804 | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment operating income | | | 31,276 | | | | 38,623 | | | | 69,899 | | | | 29,211 | | | | 49,298 | | | | 78,509 | |
| Equity earnings | | | 11,328 | | | | 20,558 | | | | 31,886 | | | | 21,194 | | | | 37,480 | | | | 58,674 | |
| | | | | |
| |
| Segment profit | | $ | 42,604 | | | $ | 59,181 | | | $ | 101,785 | | | $ | 50,405 | | | $ | 86,778 | | | $ | 137,183 | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Gathering and Processing — Gulf | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment revenues | | $ | 561 | | | $ | 459 | | | $ | 1,020 | | | $ | 567 | | | $ | 546 | | | $ | 1,113 | |
| Operating and maintenance expense | | | 550 | | | | 361 | | | | 911 | | | | 524 | | | | 519 | | | | 1,043 | |
| Depreciation and accretion | | | 304 | | | | 303 | | | | 607 | | | | 153 | | | | 151 | | | | 304 | |
| Direct general and administrative expenses | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Other, net | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment operating loss | | | (293 | ) | | | (205 | ) | | | (498 | ) | | | (110 | ) | | | (124 | ) | | | (234 | ) |
| Equity earnings | | | 3,931 | | | | 3,875 | | | | 7,806 | | | | 13,621 | | | | 8,570 | | | | 22,191 | |
| | | | | |
| |
| Segment profit | | $ | 3,638 | | | $ | 3,670 | | | $ | 7,308 | | | $ | 13,511 | | | $ | 8,446 | | | $ | 21,957 | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
NGL Services | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment revenues | | $ | 12,826 | | | $ | 13,763 | | | $ | 26,589 | | | $ | 17,462 | | | $ | 19,136 | | | $ | 36,598 | |
| Product cost | | | 2,520 | | | | 2,364 | | | | 4,884 | | | | 4,652 | | | | 4,865 | | | | 9,517 | |
| Operating and maintenance expense | | | 8,866 | | | | 4,395 | | | | 13,261 | | | | 5,667 | | | | 9,336 | | | | 15,003 | |
| Depreciation and accretion | | | 699 | | | | 728 | | | | 1,427 | | | | 774 | | | | 715 | | | | 1,489 | |
| Direct general and administrative expenses | | | 498 | | | | 470 | | | | 968 | | | | 544 | | | | 700 | | | | 1,244 | |
| Other, net | | | 190 | | | | 200 | | | | 390 | | | | 284 | | | | 106 | | | | 390 | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment profit | | $ | 53 | | | $ | 5,606 | | | $ | 5,659 | | | $ | 5,541 | | | $ | 3,414 | | | $ | 8,955 | |
| | | | | |
| | |
| * Because Wamsutter 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 recast to reflect the Equity Earnings in Wamsutter and Discovery throughout the periods presented. |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Williams Partners: | | | | | | | | | | | | | | | | | | | | | | | | |
| Conway storage revenues | | $ | 6,410 | | | $ | 6,818 | | | $ | 13,228 | | | $ | 7,333 | | | $ | 7,102 | | | $ | 14,435 | |
| Conway fractionation volumes (bpd) — our 50% | | | 31,316 | | | | 36,220 | | | | 33,781 | | | | 33,103 | | | | 38,173 | | | | 35,638 | |
| Carbonate Trend gathering volumes (BBtu/d) | | | 25 | | | | 19 | | | | 22 | | | | 24 | | | | 23 | | | | 23 | |
| Williams Four Corners: | | | | | | | | | | | | | | | | | | | | | | | | |
| Gathering volumes (BBtu/d) | | | 1,453 | | | | 1,462 | | | | 1,457 | | | | 1,316 | | | | 1,410 | | | | 1,363 | |
| Fee-based processing volumes (BBtu/d) | | | 866 | | | | 872 | | | | 869 | | | | 796 | | | | 896 | | | | 846 | |
| NGL equity sales (million gallons) | | | 46 | | | | 39 | | | | 85 | | | | 36 | | | | 43 | | | | 79 | |
| NGL margin ($/gallon) | | $ | 0.41 | | | $ | 0.53 | | | $ | 0.46 | | | $ | 0.74 | | | $ | 0.78 | | | $ | 0.76 | |
| NGL production (million gallons) | | | 140 | | | | 137 | | | | 277 | | | | 112 | | | | 140 | | | | 252 | |
| Wamsutter - 100%: | | | | | | | | | | | | | | | | | | | | | | | | |
| Gathering volumes (BBtu/d) | | | 510 | | | | 522 | | | | 516 | | | | 434 | | | | 521 | | | | 477 | |
| Fee-based processing volumes (BBtu/d) | | | 302 | | | | 312 | | | | 307 | | | | 252 | | | | 312 | | | | 282 | |
| NGL equity sales (million gallons) | | | 28 | | | | 27 | | | | 55 | | | | 41 | | | | 36 | | | | 77 | |
| NGL margin ($/gallon) | | $ | 0.27 | | | $ | 0.40 | | | $ | 0.33 | | | $ | 0.58 | | | $ | 0.63 | | | $ | 0.60 | |
| NGL production (million gallons) | | | 101 | | | | 103 | | | | 204 | | | | 106 | | | | 114 | | | | 220 | |
| Discovery Producer Services - 100% Plant inlet volumes (BBtu/d) | | | 548 | | | | 616 | | | | 582 | | | | 627 | | | | 614 | | | | 621 | |
| Gross processing margin ($/MMBtu) | | $ | 0.23 | | | $ | 0.24 | | | $ | 0.24 | | | $ | 0.45 | | | $ | 0.36 | | | $ | 0.41 | |
| NGL equity sales (million gallons) | | | 18 | | | | 25 | | | | 43 | | | | 37 | | | | 23 | | | | 60 | |
| NGL production (million gallons) | | | 56 | | | | 66 | | | | 122 | | | | 70 | | | | 58 | | | | 128 | |
