UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _________ TO _________

COMMISSION FILE NO.: 1-16335
----------------------------

WILLIAMS ENERGY PARTNERS L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 73-1599053
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

ONE WILLIAMS CENTER, P.O. BOX 3448, TULSA, OKLAHOMA 74172
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

(918) 573-2000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---

As of May 10, 2002, 5,679,694 common units were outstanding.

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

<Table>
<Caption>
Page
----

ITEM 1. FINANCIAL STATEMENTS

WILLIAMS ENERGY PARTNERS L.P.

Consolidated Statements of Income for the three months ended
March 31, 2002 and 2001.................................................................. 2

Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001................... 3

Consolidated Statement of Cash Flows for the three months ended
March 31, 2002 and 2001 ................................................................. 4

Notes to Consolidated Financial Statements............................................... 5

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ... 10

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .............................. 15

FORWARD-LOOKING STATEMENTS............................................................... 15

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS........................................................................ 16

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS................................................ 16

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.......................................................... 16

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................................... 16

ITEM 5. OTHER INFORMATION........................................................................ 17

Consolidated Statements of Income Restated to Include Williams Pipe Line Company, LLC
for the three months ended March 31, 2002 and 2001.................................... 18

Consolidated Balance Sheets Restated to Include Williams Pipe Line Company, LLC as of
March 31, 2002 and December 31, 2001 ................................................. 19

Consolidated Statement of Cash Flows Restated to Include Williams Pipe Line Company,
LLC for the three months ended March 31, 2002 and 2001................................ 20

Notes to Consolidated Financial Statements Restated to Include Williams Pipe Line
Company, LLC.......................................................................... 21

Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................................ 27

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................................... 35
</Table>

PART I

FINANCIAL INFORMATION

The financial statements in Item 1 and the related management's discussion and
analysis of financial condition and results of operations in Item 2 reflect only
the historical results of operations, financial position and cash flows of
Williams Energy Partners L.P. and do not include Williams Pipe Line Company,
LLC, which was acquired on April 11, 2002. The restated financial statements and
related management's discussion and analysis of financial condition and results
of operations, which include Williams Pipe Line Company, LLC, are provided in
this filing under Item 5.

ITEM 1. FINANCIAL STATEMENTS

WILLIAMS ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
(UNAUDITED)

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------

Revenues:
Third party ........................................................................ $ 19,921 $ 16,233
Affiliate .......................................................................... 4,301 4,053
-------- --------
Total revenues ................................................................... 24,222 20,286
Costs and expenses:
Operating .......................................................................... 8,557 8,120
Depreciation and amortization ...................................................... 2,908 3,106
Affiliate general and administrative ............................................... 3,228 2,283
-------- --------
Total costs and expenses ......................................................... 14,693 13,509
-------- --------
Operating profit ...................................................................... 9,529 6,777
Interest expense:
Affiliate interest expense ......................................................... -- 1,843
Other interest expense ............................................................. 906 835
Other expense ......................................................................... 116 8
-------- --------
Income before income taxes ............................................................ 8,507 4,091
Provision for income taxes ............................................................ -- 187
-------- --------
Net income ............................................................................ $ 8,507 $ 3,904
======== ========

Allocation of 2001 net income:
Portion applicable to the period January 1 through February 9, 2001 ................ $ 304
Portion applicable to the period February 10 through March 31, 2001 ................ 3,600
--------
Net income ....................................................................... $ 3,904
========

General partner's interest in net income applicable to the three months ended
March 31, 2002 and the period February 10 through March 31, 2001 ................... $ 242 $ 72
-------- --------

Limited partners' interest in net income applicable to the three months ended
March 31, 2002 and the period February 10 through March 31, 2001 ................... $ 8,265 $ 3,528
======== ========

Basic net income per limited partner unit ............................................. $ 0.73 $ 0.31
======== ========

Weighted average number of limited partner units outstanding used for basic
net income per unit calculation .................................................... 11,359 11,359
======== ========

Diluted net income per limited partner unit ........................................... $ 0.72 $ 0.31
======== ========

Weighted average number of limited partner units outstanding used for diluted
net income per unit calculation .................................................... 11,407 11,359
======== ========
</Table>

See accompanying notes.

WILLIAMS ENERGY PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<Table>
<Caption>
MARCH 31, DECEMBER 31,
----------- ------------
2002 2001
----------- ------------
(UNAUDITED)

ASSETS

Current assets:
Cash and cash equivalents ................................................... $ 8,150 $ 13,831
Accounts receivable (less allowance for doubtful accounts of $236 and
$285 at March 31, 2002 and December 31, 2001, respectively) ............... 15,992 13,822
Affiliate accounts receivable ............................................... 1,399 2,874
Other current assets ........................................................ 604 330
----------- -----------
Total current assets ...................................................... 26,145 30,857
Property, plant and equipment, at cost ......................................... 384,512 380,706
Less: accumulated depreciation .............................................. 54,217 51,326
----------- -----------
Net property, plant and equipment ......................................... 330,295 329,380
Goodwill (less accumulated amortization of $145) ............................... 22,429 22,282
Other intangibles (less accumulated amortization of $327 and $310 at
March 2002 and December 31, 2001, respectively) ............................. 2,622 2,639
Long-term affiliate receivables ................................................ 4,459 4,459
Long-term receivables .......................................................... 8,753 8,809
Other noncurrent assets ........................................................ 690 1,018
----------- -----------
Total assets ................................................................ $ 395,393 $ 399,444
=========== ===========

LIABILITIES & PARTNERS' CAPITAL
Current liabilities:
Accounts payable ............................................................ $ 3,921 $ 5,795
Affiliate accounts payable .................................................. 3,901 6,681
Accrued affiliate payroll and benefits ...................................... 711 797
Accrued taxes other than income ............................................. 1,968 2,314
Accrued interest payable .................................................... 169 277
Environmental liabilities ................................................... 860 905
Other current liabilities ................................................... 268 1,136
Acquisition payable ......................................................... -- 8,854
----------- -----------
Total current liabilities ................................................. 11,798 26,759
Long-term debt ................................................................. 148,000 139,500
Long-term affiliate payable .................................................... 1,112 1,262
Other deferred liabilities ..................................................... 284 284
Environmental liabilities ...................................................... 4,479 4,479
Minority interest .............................................................. -- 2,250
Commitments and contingencies
Partners' capital .............................................................. 229,720 224,910
----------- -----------
Total liabilities and partners' capital ..................................... $ 395,393 $ 399,444
=========== ===========
</Table>

See accompanying notes.

WILLIAMS ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
----------------------------
2002 2001
------------ ------------

Operating Activities:
Net income ........................................................................ $ 8,507 $ 3,904
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ................................................... 2,908 3,106
Debt issuance costs amortization ................................................ 95 --
Deferred compensation expense ................................................... 998 --
Changes in components of operating assets and liabilities:
Accounts receivable ........................................................... (2,170) (325)
Affiliate accounts receivable ................................................. 1,475 (4,406)
Accounts payable .............................................................. (1,874) (1,578)
Affiliate accounts payable .................................................... (4,862) 4,897
Accrued affiliate payroll and benefits ........................................ (86) (518)
Accrued taxes other than income ............................................... (346) (726)
Accrued interest payable ...................................................... (108) --
Current and noncurrent environmental liabilities .............................. (45) 215
Other current and noncurrent assets and liabilities ........................... (981) 1,977
------------ ------------
Net cash provided by operating activities ................................... 3,511 6,546

Investing Activities:
Additions to property, plant and equipment ........................................ (3,952) (1,772)
Purchase of business .............................................................. (8,854) --
Other ............................................................................. -- (66)
------------ ------------
Net cash used by investing activities ........................................... (12,806) (1,838)

Financing Activities:
Distributions paid ................................................................ (6,861) --
Borrowings under credit facility .................................................. 8,500 90,100
Capital contributions by affiliate ................................................ 1,975 2,737
Sales of common units to public (less underwriters' commissions and payment of
formation costs) ................................................................ -- 89,362
Debt placement costs .............................................................. -- (909)
Redemption of 600,000 common units from affiliate ................................. -- (12,060)
Payments on affiliate note payable ................................................ -- (166,493)
Cash advances from affiliate ...................................................... -- 5,226
------------ ------------
Net cash provided by financing activities ....................................... 3,614 7,963
------------ ------------

Change in cash and cash equivalents .................................................. (5,681) 12,671
Cash and cash equivalents at beginning of period ..................................... 13,831 --
------------ ------------
Cash and cash equivalents at end of period ........................................... $ 8,150 $ 12,671
============ ============

Supplemental non-cash investing and financing transactions:

Contributions by affiliate of predecessor company deferred income tax liability.... -- 13,789
Contribution of long-term debt to Partnership capital ............................. -- 59,695
------------ ------------
Total ........................................................................... $ -- $ 73,484
============ ============
</Table>

See accompanying notes.

WILLIAMS ENERGY PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

In the opinion of management, the accompanying financial statements of
Williams Energy Partners L.P. (the "Partnership"), which are unaudited, except
for the Balance Sheet as of December 31, 2001 which is derived from audited
financial statements, include all normal and recurring adjustments necessary to
present fairly the Partnership's financial position as of March 31, 2002 and the
results of operations for the three month period ended March 31, 2002 and 2001.
The results of operations for the three months ended March 31, 2002 are not
necessarily indicative of the results to be expected for the full year ending
December 31, 2002.

Pursuant to the rules and regulations of the Securities and Exchange
Commission, the financial statements do not include all of the information and
notes normally included with financial statements prepared in accordance with
accounting principles generally accepted in the United States. These financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Partnership's Annual Report on Form
10-K for the year ended December 31, 2001.

Certain amounts in the financial statements for 2001 have been reclassified
to conform to the current period's presentation.

2. ORGANIZATION

Williams Energy Partners L.P. is a Delaware limited partnership that was
formed in August 2000, to own, operate and acquire a diversified portfolio of
complementary energy assets. At the time of the Partnership's initial public
offering in February 2001, the Partnership owned: (a) selected petroleum
products terminals previously owned by Williams Energy Ventures, Inc., and (b)
an ammonia pipeline system, Williams Ammonia Pipeline Inc., previously owned by
Williams Natural Gas Liquids, Inc. Prior to the closing of the Partnership's
initial public offering in February 2001, Williams Energy Ventures, Inc. was
owned by Williams Energy Services, LLC ("WES"). Both WES and Williams Natural
Gas Liquids, Inc. are wholly owned subsidiaries of The Williams Companies, Inc.
("Williams"). Williams GP LLC ("General Partner"), a Delaware limited liability
company, was also formed in August 2000, to serve as general partner for the
Partnership.

On February 9, 2001, the Partnership completed its initial public offering
("IPO") of 4,000,000 common units representing limited partner interests in the
Partnership at a price of $21.50 per unit. The proceeds of $86.0 million were
used to pay underwriting discounts and commissions of $5.6 million and legal,
professional fees and costs associated with the initial public offering of $3.1
million, with the remainder used to reduce affiliate note balances with
Williams.

As part of the initial public offering, the underwriters exercised their
over-allotment option and purchased 600,000 common units, also at a price of
$21.50 per unit. The net proceeds of $12.1 million, after underwriting discounts
and commissions of $0.8 million, from this over-allotment option were used to
redeem 600,000 of the common units held by WES to reimburse it for capital
expenditures related to the Partnership's assets. The Partnership maintained the
historical costs of the net assets in connection with the initial public
offering. Following the exercise of the underwriters over-allotment option, 40
percent of the Partnership is owned by the public and 60 percent, including the
General Partner's ownership, is owned by affiliates of the Partnership.
Generally the limited partners' liability in the Partnership is limited to their
investment.

On February 26, 2002, the Partnership formed a wholly owned Delaware
corporation named Williams GP Inc. ("GP Inc.") The Partnership then contributed
a 0.001 percent limited partner interest in Williams OLP, L.P. ("OLP") to GP
Inc. as a capital contribution. The OLP agreement was then amended to convert GP
Inc.'s OLP limited partner interest to a general partner interest and to convert
the General Partner's existing interest to a limited partner interest. The
General Partner then contributed its 1.0101 percent OLP limited partner interest
to the Partnership in exchange for an additional 1.0 percent general partner
interest in the Partnership.

Williams GP LLC serves as the General Partner for the Partnership. The
Partnership is the limited partner of the operating limited partnership and GP
Inc. serves as its general partner.

3. SEGMENT DISCLOSURES

Management evaluates performance based upon segment profit or loss from
operations, which includes revenues from affiliate and external customers,
operating expenses, depreciation and affiliate general and administrative
expenses. Affiliate revenues are accounted for as if the sales were to
unaffiliated third parties.

The Partnership's reportable segments are strategic business units that
offer different products and services. The segments are managed separately
because each segment requires different marketing strategies and business
knowledge.

<Table>
<Caption>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 2002 MARCH 31, 2001
------------------------------------ ------------------------------------
PETROLEUM AMMONIA PETROLEUM AMMONIA
PRODUCTS PIPELINE PRODUCTS PIPELINE
TERMINALS SYSTEM TOTAL TERMINALS SYSTEM TOTAL
----------- ----------- -------- ----------- ----------- --------

Revenues:
Third party customers .......... $ 15,546 $ 4,375 $ 19,921 $ 13,545 $ 2,688 $ 16,233
Affiliate customers ............ 4,301 -- 4,301 4,053 -- 4,053
----------- ----------- -------- ----------- ----------- --------
Total revenues ............... 19,847 4,375 24,222 17,598 2,688 20,286
Operating expenses ................ 7,412 1,145 8,557 7,177 943 8,120
Depreciation and amortization ..... 2,744 164 2,908 2,944 162 3,106
Affiliate general and
administrative expenses ........ 2,677 551 3,228 2,016 267 2,283
----------- ----------- -------- ----------- ----------- --------
Segment profit .................... $ 7,014 $ 2,515 $ 9,529 $ 5,461 $ 1,316 $ 6,777
=========== =========== ======== =========== =========== ========

Total assets ...................... $ 362,073 $ 33,320 $395,393 $ 310,638 $ 23,845 $334,483
=========== =========== ======== =========== =========== ========
</Table>

4. RELATED PARTY TRANSACTIONS

Beginning with the closing date of the IPO, the General Partner, through
provisions included in the omnibus agreement, has limited the amount of general
and administrative costs charged to the Partnership. The additional general and
administrative costs incurred by the General Partner, but not charged to the
Partnership, totaled $2.8 million for the three months ended March 31, 2002 and
$0.5 million for the period February 10, 2001 through March 31, 2001.

5. LONG-TERM DEBT

Long-term debt and available borrowing capacity at March 31, 2002, were
$148.0 million and $27.0 million, respectively. At March 31, 2002, the
Partnership had a $175.0 million bank credit facility. The credit facility was
comprised of a $90.0 million term loan facility and an $85.0 million revolving
credit facility, which includes a $73.0 million acquisition sub-facility and a
$12.0 million working capital sub-facility. On February 9, 2001, the OLP
borrowed $90.0 million under the term loan facility and $0.1 million under the
acquisition sub-facility. The $0.1 million borrowed under the acquisition
sub-facility was repaid in July 2001. In June 2001, the Partnership borrowed
$29.5 million under the acquisition sub-facility to fund the purchase of two
terminals in Little Rock, Arkansas from TransMontaigne, Inc. In October 2001,
the Partnership borrowed $20.0 million to fund the acquisition of the Gibson,
Louisiana terminal from Geonet Gathering, Inc. In January 2002, the Partnership
borrowed $8.5 million to fund the acquisition of a pipeline from Aux Sable
Liquid Products L.P.

The credit facility's term extends through February 5, 2004, with all
amounts due at that time. Borrowings under the credit facility carry an interest
rate equal to the Eurodollar rate plus a spread from 1.0 percent to 1.5 percent,
depending on the OLP's leverage ratio. Interest is also assessed on the unused
portion of the credit facility at a rate from 0.2 percent to 0.4 percent,
depending on the OLP's leverage ratio. The OLP's leverage ratio is defined as
the ratio of consolidated total debt to consolidated earnings before interest,
income taxes, depreciation and amortization for the period of the four fiscal
quarters ending on such date. Closing fees associated with the initiation of the
credit facility were $0.9 million, which are

being amortized over the life of the facility. The average interest rates at
March 31, 2002 and 2001 were 3.3 percent and 6.5 percent, respectively, on the
credit facility.

6. COMMITMENTS AND CONTINGENCIES

WES has agreed to indemnify the Partnership against any covered
environmental losses, up to $15.0 million, relating to assets it contributed to
the Partnership that arose prior to February 9, 2001, that become known within
three years after February 9, 2001, and that exceed all amounts recovered or
recoverable by the Partnership under contractual indemnities from third parties
or under any applicable insurance policies. Covered environmental losses are
those non-contingent terminal and ammonia system environmental losses, costs,
damages and expenses suffered or incurred by the Partnership arising from
correction of violations of, or performance of remediation required by,
environmental laws in effect at February 9, 2001, due to events and conditions
associated with the operation of the assets and occurring before February 9,
2001.

Estimated liabilities for environmental costs were $5.3 million and $5.4
million at March 31, 2002 and December 31, 2001, respectively. Management
estimates that expenditures associated with these environmental remediation
liabilities will be paid over the next two to five years. Receivables associated
with these environmental liabilities of $5.1 million at March 31, 2002 and
December 31, 2001 have been recognized as recoverable from affiliates and third
parties. These estimates, provided on an undiscounted basis, were determined
based primarily on data provided by a third-party environmental evaluation
service. These liabilities have been classified as current or non-current based
on management's estimates regarding the timing of actual payments.

In conjunction with the 1999 acquisition of the Gulf Coast marine terminals
from Amerada Hess Corporation ("Hess"), Hess has disclosed to the Partnership
all suits, actions, claims, arbitrations, administrative, governmental
investigation or other legal proceedings pending or threatened, against or
related to the assets acquired by the Partnership, which arise under
environmental law. Hess agreed to indemnify the Partnership through July 30,
2014 against all known and required environmental remediation costs at the
Corpus Christi and Galena Park, Texas marine terminal facilities from any
matters related to pre-acquisition actions. Also, in the event that any
pre-acquisition releases of hazardous substances at the Partnership's Corpus
Christi and Galena Park, Texas and Marrero, Louisiana marine terminal facilities
are identified by the Partnership prior to July 30, 2004, the Partnership will
be liable for the first $2.5 million of environmental liabilities, Hess will be
liable for the next $12.5 million of losses, and the Partnership will assume
responsibility for any losses in excess of $15.0 million. Hess has indemnified
the Partnership for a variety of pre-acquisition fines and claims that may be
imposed or asserted against the Partnership under certain environmental laws. At
both December 31, 2001 and December 31, 2000, the Partnership had accrued $0.6
million for costs that may not be recoverable under Hess' indemnification.

During 2001, the Partnership recorded an environmental liability of $2.6
million at its New Haven, Connecticut facility, which was acquired in September
2000. This liability was based on third-party environmental engineering
estimates completed as part of a Phase II environmental assessment, routinely
required by the State of Connecticut to be conducted by the purchaser following
the acquisition of a petroleum storage facility. The Partnership will complete a
Phase III environmental assessment at this facility during the second or third
quarter of 2002, and the environmental liability could change materially based
on this more thorough analysis. The seller of these assets agreed to indemnify
the Partnership for certain of these environmental liabilities. In addition, the
Partnership purchased insurance for up to $25.0 million of environmental
liabilities associated with these assets, which carries a deductible of $0.3
million. Any environmental liabilities at this location not covered by the
seller's indemnity and not covered by insurance are covered by the WES
environmental indemnifications to the Partnership, subject to the $15.0 million
limitation.

WNGL will indemnify the Partnership for right-of-way defects or failures in
the ammonia pipeline easements for 15 years after the initial public offering
closing date. WES has also indemnified the Partnership for right-of-way defects
or failures associated with the marine terminal facilities at Galena Park,
Corpus Christi and Marrero for 15 years after the initial public offering
closing date.

The Partnership is party to various other claims, legal actions and
complaints arising in the ordinary course of business. In the opinion of
management, the ultimate resolution of all claims, legal actions and complaints
after consideration of amounts accrued, insurance coverage or other
indemnification arrangements will not have a material adverse effect upon the
Partnership's future financial position, results of operations or cash flows.

7. RESTRICTED UNITS

In February 2001, the General Partner adopted the Williams Energy Partners'
Long-Term Incentive Plan for Williams' employees who perform services for
Williams Energy Partners L.P. and directors of the General Partner. The
Long-Term Incentive Plan consists of two components, phantom units and unit
options. The Long-Term Incentive Plan permits the grant of awards covering an
aggregate of 700,000 common units. The Long-Term Incentive Plan is administered
by the compensation committee of the General Partner's board of directors.

In April 2001, the General Partner issued grants of 92,500 restricted
units, which are also referred to as phantom units, to certain key employees
associated with the Partnership's initial public offering in February 2001.
These one-time initial public offering phantom units will vest over a 34-month
period ending on February 9, 2004, and are subject to forfeiture if employment
is terminated prior to vesting. These units are subject to early vesting if the
Partnership achieves certain performance measures. The Partnership achieved the
first of two performance measures in February 2002 and as a result, 46,250 of
the phantom units vested, resulting in a charge to compensation expense of
approximately $1.0 million. The Partnership recognized additional compensation
expense of $0.2 million related to the remaining non-vested units associated
with these grants in the three months ended March 31, 2002. The fair market
value of the phantom units associated with this grant was $2.8 million on the
grant date.

In April 2001, the General Partner issued grants of 64,200 phantom units
associated with the annual incentive compensation plan. The actual number of
units that will be awarded under this grant will be determined by the
Partnership on February 9, 2004. At that time, the Partnership will assess
whether certain performance criteria have been met and determine the number of
units that will be awarded, which could range from zero units up to a total of
128,400 units. These units are also subject to forfeiture if employment is
terminated prior to February 9, 2004. These awards do not have an early vesting
feature. The Partnership recognized $0.4 million of deferred compensation
expense associated with these awards for the three months ended March 31, 2002.
The fair market value of the phantom units associated with this grant was $5.0
million on March 31, 2002.

8. DISTRIBUTIONS

Distributions paid by the Partnership during 2001 and 2002 are as follows:

<Table>
<Caption>
Date
Cash Per Unit Cash Total
Distribution Distribution Cash
Paid Amount Distribution
------------ ------------- ------------

05/15/01(a) $0.2920 $3.4 million
08/14/01 $0.5625 $6.5 million
11/14/01 $0.5775 $6.7 million
02/14/02 $0.5900 $6.9 million
05/15/02(b) $0.6125 $7.2 million
</Table>

(a) This distribution represented the prorated minimum quarterly
distribution for the 50-day period following the initial public offering closing
date, which included February 10, 2001 through March 31, 2001.

(b) The General Partner declared this cash distribution on April 22, 2002
to be paid on May 15, 2002, to unitholders of record at the close of business on
May 2, 2002.

9. NET INCOME PER UNIT

The following table provides details of the basic and diluted net income
per unit computations (in thousands, except per unit amounts):

<Table>
<Caption>
FOR THE THREE MONTHS ENDED MARCH 31, 2002
------------------------------------------
INCOME UNITS PER UNIT
(NUMERATOR) (DENOMINATOR) AMOUNT
------------ ------------ ------------

Limited partners' interest in net income .............. $ 8,265

Basic net income per common and subordinated unit ..... $ 8,265 11,359 $ 0.73

Effect of dilutive restrictive unit grants ............ -- 48 (0.01)
------------ ------------ ------------

Diluted net income per common and subordinated unit ... $ 8,265 11,407 $ 0.72
============ ============ ============
</Table>

Units reported as dilutive securities are related to restricted unit grants
associated with the one-time initial public offering award (see Note 7).

10. SUBSEQUENT EVENTS

On April 11, 2002, the Partnership acquired Williams Pipe Line Company, LLC
("Williams Pipe Line"), which owns a 6,700-mile refined petroleum products
pipeline with 39 related storage and distribution terminal assets, from a
subsidiary of Williams for approximately $1.0 billion. The Partnership remitted
to WES cash consideration in the amount of $674.4 million and WES retained $15.0
million of Williams Pipe Line's receivables. The $310.6 million balance of the
purchase price consisted of $304.4 million of Class B units representing limited
partner interests in the Partnership and the contribution to the Partnership by
Williams GP LLC of $6.2 million to maintain its 2.0 percent general partner
interest. To initially fund the acquisition, the Partnership borrowed $700.0
million under a six-month loan from a group of financial institutions consisting
of Bank of America, N.A., Citibank, N.A., J.P. Morgan Chase Bank, Lehman
Brothers Inc. and Merrill Lynch Credit Corporation. From these funds, the
Partnership paid transaction fees and costs of $10.6 million, remitted $674.4
million to WES and retained $15.0 million for working capital requirements. The
Partnership expects to replace this interim financing in the future with
permanent financing in the form of additional equity and long-term debt.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

INTRODUCTION

The information contained in Management's Discussion and Analysis of
Financial Condition and Results of Operations should be read in conjunction with
the consolidated financial statements and notes thereto. Williams Energy
Partners L.P. is a Delaware limited partnership formed by The Williams
Companies, Inc. ("Williams") to own, operate and acquire a diversified portfolio
of complementary energy assets. We are principally engaged in the
transportation, storage and distribution of refined petroleum products and
ammonia. Our asset portfolio as of March 31, 2002 consisted of:

- five marine terminal facilities;

- 25 inland terminals (some of which are partially owned); and

- an ammonia pipeline system.

Most of these assets were acquired and owned by several wholly owned
subsidiaries of Williams prior to our initial public offering. Upon the closing
of our initial public offering on February 9, 2001, these assets were
transferred to us, including the related liabilities. The following discussion
has been prepared as if the assets were operated as a stand-alone business
throughout the periods presented.

RECENT DEVELOPMENTS

On April 22, 2002, our General Partner declared an increase in the quarterly
cash distribution from $0.59 to $0.6125 per common and subordinated unit,
representing a 3.8 percent increase over the previous quarter's distribution and
a 16.7 percent increase since our initial public offering in February 2001. The
distribution increase is for the period of January 1 through March 31, 2002. The
distribution will be paid on May 15, 2002 to unitholders of record at the close
of business on May 2, 2002.

On April 11, 2002, we acquired Williams Pipe Line Company, LLC from a
subsidiary of Williams for approximately $1.0 billion. Williams Pipe Line
Company, LLC owns the Williams Pipe Line system, which consists of a 6,700-mile
refined petroleum products pipeline with 39 related storage and distribution
terminal assets. The Partnership remitted to Williams Energy Services cash
consideration in the amount of $674.4 million and Williams Energy Services
retained $15.0 million of Williams Pipe Line's receivables. The $310.6 million
balance of the purchase price consisted of $304.4 million of Class B units
representing limited partner interests in the Partnership and the contribution
to us by Williams GP LLC of $6.2 million to maintain its 2 percent general
partner interest. To initially fund the acquisition, we borrowed $700.0 million
under a six-month loan from a group of financial institutions consisting of Bank
of America, N.A., Citibank, N.A., J.P. Morgan Chase Bank, Lehman Brothers Inc.
and Merrill Lynch Credit Corporation. From these funds, we paid transaction fees
and costs of $10.6 million, remitted $674.4 million to Williams and retained
$15.0 million for working capital requirements. We expect to replace this
interim financing in the future with permanent financing in the form of
additional equity and long-term debt.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO MARCH 31, 2001

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
(MILLIONS)

FINANCIAL HIGHLIGHTS
Revenues:
Petroleum products terminals ............................................. $ 19.8 $ 17.6
Ammonia pipeline system .................................................. 4.4 2.7
-------- --------
Total revenues ...................................................... 24.2 20.3

Operating expenses:
Petroleum products terminals ............................................. 7.5 7.2
Ammonia pipeline system .................................................. 1.1 0.9
-------- --------
Total operating expenses ............................................ 8.6 8.1
-------- --------
Total operating margin .............................................. $ 15.6 $ 12.2
======== ========

OPERATING STATISTICS
Petroleum products terminals:
Marine terminal facilities:
Average storage capacity utilized per month (barrels in millions) ... 16.0 15.2
Throughput (barrels in millions) (a) ................................ 5.0 3.3
Inland terminals:
Throughput (barrels in millions) .................................... 13.9 11.7
Ammonia pipeline system:
Volume shipped (tons in thousands) ....................................... 257 160
</Table>

- ----------

(a) For the three months ended March 31, 2002, represents throughput at the
Gibson and New Haven marine facilities. As the Gibson facility was acquired
in October 2001, the three months ended March 31, 2001 represents
throughput at the New Haven facility only.

Combined revenues for the three months ended March 31, 2002 were $24.2
million compared to $20.3 million for the three months ended March 31, 2001, an
increase of $3.9 million, or 19 percent. This increase was a result of:

o an increase in petroleum products terminals revenues of $2.2 million, or
13 percent, due to the following:

-- an increase in the marine terminal facilities revenues of $1.1 million,
from $14.2 million to $15.3 million. This increase is primarily attributable to
the addition of the Gibson facility that was acquired in October 2001. Included
in this revenue is a $0.9 million increase, from $2.2 million in 2001 to $3.1
million in 2002, from Williams Energy Marketing & Trading Company, an affiliate
of our General Partner that utilizes our facilities in connection with its
trading business; and

-- an increase in inland terminal revenues of $1.1 million, from $3.4
million to $4.5 million. Revenues increased primarily due to the June 2001
acquisition of two Little Rock inland terminals and the initiation of jet fuel
service to Dallas Love Field, partially offset by lower throughput volumes at
several of our other inland terminals due to unfavorable market conditions.
Included in this revenue is a $0.7 million decrease, from $1.9 million in 2001
to $1.2 million in 2002, from Williams Refining & Marketing, L.L.C. and Williams
Energy Marketing & Trading Company, affiliates of our General Partner that
utilize our facilities in connection with their trading businesses;

component for the production of ammonia. As the price of natural gas has
declined to more historical levels, our customers have elected to produce and
ship more ammonia through our pipeline. In addition, tariffs increased by $0.36
per ton, from a weighted-average tariff of $16.18 per ton for 2001 compared to
$16.54 per ton for 2002. The increase in the weighted-average tariff resulted
from the 2001 mid-year indexing adjustment allowed under the transportation
agreements.

Operating expenses for the three months ended March 31, 2002 were $8.6
million compared to $8.1 million for the three months ended March 31, 2001, an
increase of $0.5 million, or 6 percent. This increase was a result of:

o an increase in petroleum products terminals expenses of $0.3 million, or
4 percent, due to:

-- marine terminal facilities expenses increased $0.1 million from $5.1
million in first quarter 2001 to $5.2 million in 2002 due to the addition of the
Gibson facility in October 2001. Higher property taxes at New Haven were offset
by reduced utility costs at the Gulf Coast facilities; and

-- inland terminal expenses increased $0.2 million from $2.1 million for
the three months ended March 2001 to $2.3 million for the same period in 2002.
These increased expenses were principally due to the acquisition of the Little
Rock terminals in June 2001;

o an increase in ammonia pipeline system expenses of $0.2 million primarily
due to higher property taxes and increased costs associated with greater volume
shipments.

Depreciation and amortization expenses for the three months ended March 31,
2002 were $2.9 million compared to $3.1 million for the three months ended March
31, 2001, a decrease of $0.2 million, or 6 percent. This decrease was primarily
due to adjustments resulting from asset reclassifications in the first quarter
of 2001, partially offset by an increase in depreciation expense due primarily
to acquisitions.

General and administrative expenses for the three months ended March 31,
2002 were $3.2 million compared to $2.3 million for the three months ended March
31, 2001, an increase of $0.9 million, or 39 percent. General and administrative
expenses are allocated from Williams as defined by the omnibus agreement. For
2002, these expense allocations were limited to $1.7 million per quarter plus
actual incentive compensation expenses related to Williams Energy Partners'
performance. The amount of general and administrative expenses incurred by the
General Partner but not allocated to us was $2.8 million for the three months
ended March 31, 2002. Incentive compensation costs associated with our long-term
incentive plan are specifically excluded from the expense limitation and were
$1.5 million during the three months ended March 31, 2002. The current quarter
incentive compensation costs included a $1.0 million charge associated with the
early vesting of a portion of the phantom units issued to key employees at the
time of our initial public offering. The early vesting was triggered as a result
of our growth in cash distributions paid to unitholders. The limit on general
and administrative expense that can be charged by our General Partner to us will
continue to be adjusted in the future to reflect additional general and
administrative expenses associated with completed acquisitions.

Interest expense for the three months ended March 31, 2002 was $0.9 million
compared to $2.7 million for the three months ended March 31, 2001. The decline
in interest expense was primarily related to the partial payment and
cancellation of an affiliate note in connection with the closing of the initial
public offering on February 9, 2001. In addition, the average interest rate on
borrowings has declined from 6.5 percent at March 31, 2001 to 3.3 percent at
March 31, 2002.

We do not pay income taxes because we are a partnership. We primarily based
our income tax rate of 38 percent for our pre-IPO earnings in 2001 upon the
effective income tax rate for Williams. The effective income tax rate exceeds
the U.S. federal statutory income tax rate primarily due to state income taxes.

Net income for the three months ended March 31, 2002, was $8.5 million
compared to $3.9 million for the three months ended March 31, 2001, an increase
of $4.6 million, or 118 percent. The operating margin increased by $3.4 million
during the period, largely as a result of the acquisitions of the Little Rock
and Gibson facilities and increased volumes on the ammonia system. In addition,
general and administrative expenses increased by $0.9 million while depreciation
and interest expenses decreased by $2.0 million.

Income taxes declined by $0.2 million as a result of the elimination of income
taxes after the close of our initial public offering on February 9, 2001.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS AND CAPITAL EXPENDITURES

Net cash provided by operating activities for the three months ended March
31, 2002 was $3.5 million compared to $6.5 million for the three months ended
March 31, 2001. The $3.0 million decrease in cash from 2001 to 2002 was
primarily a result of a decrease in affiliate accounts payable due to the
payment of the outstanding amounts owed to Williams for payroll and other
general and administrative functions performed by our affiliate for us. This
cash decline was partially offset by the growth of our net income before
non-cash expenses such as depreciation and deferred compensation. Acquisitions
and enhanced operations of our initial assets increased operating margins
between these periods.

Net cash used by investing activities for the three months ended March 31,
2002 and 2001 was $12.8 million and $1.8 million, respectively. Investing
activities in 2002 include $8.9 million for the purchase of the natural gas
liquids pipeline from Aux Sable Liquid Products L.P. ("Aux Sable") that was
effective December 2001. Maintenance capital for the period ended March 31, 2002
was $4.0 million, compared with $1.4 million during 2001. Please see Capital
Requirements below for more discussion of capital expenditures.

Net cash provided by financing activities for the three months ended March
31, 2002 and 2001 was $3.6 million and $8.0 million, respectively. The cash
provided for the first three months of 2002 principally involved borrowings for
the purchase of the pipeline from Aux Sable, partially offset by distributions
paid to unitholders. The cash inflow in the first three months of 2001 is
primarily comprised of proceeds from equity and debt issued at the time of our
initial public offering, partially offset by payments on our affiliate note
payable.

CAPITAL REQUIREMENTS

The transportation, storage and distribution business requires continual
investment to upgrade or enhance existing operations and to ensure compliance
with safety and environmental regulations. The capital requirements of our
business have consisted, and we expect them to continue to consist, primarily
of:

- maintenance capital expenditures, such as those required to maintain
equipment reliability and safety and to address environmental regulations; and

- expansion capital expenditures to acquire additional complementary assets
to grow our business and to expand or upgrade our existing facilities, such as
projects that increase storage or throughput volumes.

Williams has agreed to reimburse us for maintenance capital in excess of
$4.9 million per year during 2001 and 2002 on the assets initially included in
the initial public offering up to a combined maximum reimbursement of $15.0
million. During 2001, we incurred $3.9 million of maintenance capital costs in
excess of the $4.9 million limit agreement with Williams. The total amount we
expect to spend on maintenance capital for these assets in 2002 is $16.0
million. Through March 2002, our maintenance capital expenditures were $4.0
million. After we spend an additional $0.9 million for maintenance capital in
2002, Williams will reimburse us over the remainder of this fiscal year up to
$11.1 million. Excluding reimbursements from Williams, all maintenance capital
expenditures are funded through cash from operating activities.

In addition to maintenance capital, we are also planning to incur expansion
and upgrade capital expenditures at our existing facilities including pipeline
connections and construction of additional tankage. The total amount we plan to
spend for expansion is approximately $7.0 million in 2002, not including capital
needs associated with acquisition opportunities. We expect to fund our capital
expenditures, including any acquisitions, from:

o cash provided by operations;

o borrowings under the revolving credit facility discussed below and
other borrowings; and

o issuance of additional common and other classes of equity units.

LIQUIDITY

Subsequent to the closing of our initial public offering, we have relied on
cash generated from internal operations as our primary source of funding for
uses other than expansion capital expenditures. Additional funding requirements
are met by a $175.0 million credit facility, which expires on February 5, 2004.
This credit facility is comprised of a $90.0 million term loan and an $85.0
million revolving credit facility. The revolving credit facility is comprised of
a $73.0 million acquisition sub-facility and a $12.0 million working capital
sub-facility. As of March 31, 2002, $15.0 million was available under the
acquisition sub-facility and $12.0 million was available under the working
capital sub-facility.

The credit facility contains various operational and financial covenants.
Management believes that we are in compliance with all of these covenants.

NEW ACCOUNTING PRONOUNCEMENTS

In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets." This Statement supersedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of" and amends Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." The Statement retains the basic framework of SFAS No.
121, resolves certain implementation issues of SFAS No. 121, extends
applicability to discontinued operations and broadens the presentation of
discontinued operations to include a component of an entity. The Statement is to
be applied prospectively and is effective for financial statements issued for
fiscal years beginning after December 15, 2001. We adopted this standard in
January 2002. The Statement had no initial impact on our results of operations
or financial position.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 establishes
accounting and reporting standards for business combinations and requires all
business combinations to be accounted for by the purchase method. The Statement
is effective for all business combinations for which the date of acquisition is
July 1, 2001 or later. SFAS No. 142 addresses accounting and reporting standards
for goodwill and other intangible assets. Under this Statement, goodwill and
intangible assets with indefinite useful lives will no longer be amortized but
will be tested annually for impairment. The Statement becomes effective for all
fiscal years beginning after December 15, 2001. We have applied the new rules on
accounting for goodwill and other intangible assets beginning January 1, 2002.
Based on the amount of goodwill recorded as of December 31, 2001, application of
the non-amortization provision of the Statement resulted in a decrease to
amortization expense in the first quarter of 2002 of approximately $0.2 million.

RELATED PARTY TRANSACTIONS

Williams Energy Marketing & Trading Company and Williams Refining &
Marketing, L.L.C., subsidiaries of Williams and affiliates of ours, are
significant customers at our petroleum products terminals, representing 12.8
percent and 4.9 percent, respectively, of our total revenues for the quarter
ended March 31, 2002. The principal business of Williams Energy Marketing &
Trading is energy marketing and trading. Williams Refining & Marketing primarily
owns and operates a refinery in Memphis, Tennessee, but also engages in the
purchase and sale of crude and refined petroleum products. We have entered into
a number of commercial agreements with affiliates. These agreements vary
depending upon location and the types of services provided. A summary of the
significant agreements follows:

Inland Terminal Use and Access Agreements. We have entered into several
agreements with Williams Energy Marketing & Trading and Williams Refining &
Marketing for the access and utilization of our inland terminal facilities. The
services provided under these agreements include the receipt and delivery of
refined petroleum products via connecting pipelines, tank trucks or transport
terminals. Additional services include product handling, storage and additive
injection. These agreements establish a fixed fee at which these services are
provided at rates consistent with those we charge to non-affiliated entities. A
majority of these contracts have a term of one year and are renewed on an annual
basis

Products Terminalling Agreement for our Galena Park, Texas Marine Terminal
Facility. We have entered into an agreement with Williams Energy Marketing &
Trading to provide approximately 2.5 million barrels of storage and to provide
other ancillary services at our Galena Park, Texas marine terminal facility.
Because the storage fees are fixed and the storage capacity is already
committed, revenues fluctuate only to the extent other ancillary services are
utilized. The primary services provided include receipt and delivery of refined
petroleum products and blendstocks via marine vessel, pipeline, tank truck or
other customers within the terminal facility. Upon the request of Williams
Energy Marketing & Trading, we provide gasoline-blending services to their
product at an additional cost. The prices we charge under this agreement are
consistent with those we charge to non-affiliated entities. The agreement
extends until September 30, 2004, at which time the agreement may be renewed on
a monthly basis.

Products Terminalling Agreement for Galena Park, Texas Marine Terminal
Facility. We entered an agreement with Williams Energy Marketing & Trading to
provide up to 0.1 million barrels of storage at our Galena Park facility and to
provide other ancillary services including blending and tank heating services.
The primary services we provide include receipt and delivery of refined
petroleum products and blendstocks at Galena Park. The prices charged under this
agreement are consistent with those charged to non-affiliated entities.

Products Terminalling Agreement for the Gibson, Louisiana Marine Terminal
Facility. We have entered into an agreement to provide Williams Energy Marketing
& Trading with capacity utilization rights to substantially all of the capacity
of the Gibson, Louisiana terminal for nine years starting November 1, 2001. This
agreement provides for the delivery of crude oil and condensate to our terminal
by barge, truck and pipeline where we then provide storage, blending and
throughput services. Williams Energy Marketing & Trading has committed to
utilize primarily all of the capacity at our facility at a fixed rate that is
consistent with rates charged by other service providers for similar services at
other locations and will only increase approximately 1 percent per year or when
volumes exceed predetermined levels. As a result, the revenues we receive should
not vary as long as the services we provide do not fall below certain
performance standards.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Williams Energy Partners currently does not engage in interest rate,
foreign currency exchange rate or commodity price-hedging transactions.

Market risk is the risk of loss arising from adverse changes in market rates
and prices. The principal market risk to which we are exposed is interest rate
risk. Debt we incur under our credit facility bears variable interest based on
the Eurodollar rate. If the Eurodollar rate changed by 0.125 percent, our annual
debt coverage obligations associated with the $148.0 million of outstanding
borrowings under the credit facility at March 31, 2002 would change by
approximately $0.2 million. Unless interest rates change significantly in the
future, our exposure to interest rate market risk is minimal.

FORWARD-LOOKING STATEMENTS

Certain matters discussed in this Quarterly Report on Form 10-Q include
forward-looking statements - statements that discuss our expected future results
based on current and pending business operations. We make these forward-looking
statements in reliance on the safe harbor protections provided under the Private
Securities Litigation Reform Act of 1995.

Forward-looking statements can be identified by words such as "anticipates",
"believes", "expects", "estimates", "forecasts", "projects" and other similar
expressions. Although we believe our forward-

looking statements are based on reasonable assumptions, statements made
regarding future results are subject to numerous assumptions, uncertainties and
risks that may cause future results to be materially different from the results
stated or implied in this document.

The following are among the important factors that could cause actual
results to differ materially from any results projected, forecasted, estimated
or budgeted:

o Changes in demand for refined petroleum products that we store and
distribute;

o Changes in demand for storage in our petroleum products terminals;

o Changes in the throughput on petroleum products pipelines owned and
operated by third parties and connected to our petroleum products
terminals;

o Loss of Williams Energy Marketing & Trading or Williams Refining &
Marketing as customers;

o Loss of one or all of our three customers on our ammonia pipeline
system;

o An increase in the price of natural gas, which increases ammonia
production costs and could reduce the amount of ammonia transported
through our ammonia pipeline system;

o Changes in the federal government's policy regarding farm subsidies,
which could negatively impact the demand for ammonia and reduce the
amount of ammonia transported through our ammonia pipeline system;

o An increase in the competition our petroleum products terminals and
ammonia pipeline system encounter;

o The occurrence of an unforeseen interruption in operations for which
we are not adequately insured;

o Changes in the general economic conditions in the United States;

o Changes in laws and regulations to which we are subject, including
tax, environmental and employment laws and regulations;

o The cost and effects of legal and administrative claims and
proceedings against us or our subsidiaries;

o The ability to raise capital in a cost-effective way;

o The effect of changes in accounting policies;

o The ability to manage rapid growth; and

o The ability to control costs.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

No material litigation has been filed against the Partnership during the
three months ended March 31, 2002, and there have been no material changes in
legal proceedings previously disclosed.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

During the quarter ended March 31, 2002, the Partnership did not issue any
equity securities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

On April 11, 2002, the Partnership acquired all of the membership interests
of Williams Pipe Line for approximately $1.0 billion. Williams Pipe Line is a
subsidiary of Williams and an affiliate company of the Partnership. Because of
our affiliate relationship with Williams Pipe Line, the transaction was between
entities under common control and, as such, was accounted for similarly to a
pooling of interest. Accordingly, the following consolidated financial
statements and notes have been restated to reflect the historical results of
operations, financial position and cash flows of the companies on a combined
basis throughout the periods presented.

WILLIAMS ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF INCOME
RESTATED TO INCLUDE WILLIAMS PIPE LINE COMPANY, LLC
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
(UNAUDITED)

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
----------------------
2002 2001
--------- ---------

Transportation and terminalling revenues:
Third party ...................................................................... $ 73,261 $ 71,880
Affiliate ........................................................................ 7,569 5,924
Product sales revenues:
Third party ...................................................................... 6,117 14,886
Affiliate ........................................................................ 15,491 14,606
Affiliate construction and management fee revenues .................................. 210 380
--------- ---------
Total revenues ................................................................. 102,648 107,676
Costs and expenses:
Operating ........................................................................ 33,066 37,355
Product purchases ................................................................ 18,409 27,844
Depreciation and amortization .................................................... 8,964 9,041
General and administrative ....................................................... 13,457 10,578
--------- ---------
Total costs and expenses ....................................................... 73,896 84,818
--------- ---------
Operating profit .................................................................... 28,752 22,858
Interest expense:
Affiliate interest expense ....................................................... 407 4,151
Other interest expense ........................................................... 906 835
Interest income ..................................................................... (550) (729)
Other income ........................................................................ (953) (211)
--------- ---------
Income before income taxes .......................................................... 28,942 18,812
Provision for income taxes .......................................................... 7,816 5,759
--------- ---------
Net income .......................................................................... $ 21,126 $ 13,053
========= =========

Allocation of net income:
Portion applicable to the period January 1 through February 9, 2001 .............. $ -- $ 304
Portion applicable to partnership interests for the period January 1 through
March 31, 2002 and February 10 through March 31, 2001 .......................... 8,507 3,600
Portion applicable to Williams Pipe Line ......................................... 12,619 9,149
--------- ---------
Net income ..................................................................... $ 21,126 $ 13,053
========= =========

General partner's interest in net income applicable to the three months ended
March 31, 2002 and the period February 10 through March 31, 2001 ................. $ 242 $ 72
--------- ---------

Limited partners' interest in net income applicable to the three months ended
March 31, 2002 and the period February 10 through March 31, 2001 ................. $ 8,265 $ 3,528
========= =========

Basic net income per limited partner unit ........................................... $ 0.73 $ 0.31
========= =========

Weighted average number of limited partner units outstanding used for basic net
income per unit calculation ...................................................... 11,359 11,359
========= =========

Diluted net income per limited partner unit ......................................... $ 0.72 $ 0.31
========= =========

Weighted average number of limited partner units outstanding used for diluted
net income per unit calculation .................................................. 11,407 11,359
========= =========
</Table>

See accompanying notes.

WILLIAMS ENERGY PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
RESTATED TO INCLUDE WILLIAMS PIPE LINE COMPANY, LLC
(IN THOUSANDS)

<Table>
<Caption>
MARCH 31, DECEMBER 31,
---------- ------------
2002 2001
---------- ------------
(UNAUDITED)

ASSETS

Current assets:
Cash and cash equivalents ................................................... $ 8,150 $ 13,837
Accounts receivable (less allowance for doubtful accounts of $461 and
$510 at March 31, 2002 and December 31, 2001) ............................. 20,896 18,157
Other accounts receivable ................................................... 9,225 10,754
Affiliate accounts receivable ............................................... 2,369 6,386
Inventory ................................................................... 16,075 21,057
Deferred income taxes - affiliate ........................................... 1,690 1,690
Other current assets ........................................................ 4,993 3,185
---------- ------------
Total current assets ...................................................... 63,398 75,066
Property, plant and equipment, at cost ......................................... 1,347,215 1,338,393
Less: accumulated depreciation .............................................. 383,482 374,653
---------- ------------
Net property, plant and equipment ......................................... 963,733 963,740
Goodwill (less amortization of $145) ........................................... 22,429 22,282
Other intangibles (less amortization of $327 and $310 at March 31, 2002 and
December 31, 2001) .......................................................... 2,622 2,639
Long-term affiliate receivables ................................................ 23,461 21,296
Long-term receivables .......................................................... 11,890 8,809
Other noncurrent assets ........................................................ 6,998 10,727
---------- ------------
Total assets ................................................................ $1,094,531 $ 1,104,559
========== ============

LIABILITIES AND PARTNERS' CAPITAL

Current liabilities:
Accounts payable ............................................................ $ 9,423 $ 12,636
Affiliate accounts payable .................................................. 18,141 10,157
Affiliate income taxes payable .............................................. 11,183 8,544
Accrued affiliate payroll and benefits ...................................... 2,483 4,606
Accrued taxes other than income ............................................. 10,220 9,948
Accrued interest payable .................................................... 169 277
Environmental liabilities ................................................... 8,500 8,650
Deferred revenue ............................................................ 4,658 5,103
Other current liabilities ................................................... 7,687 8,503
Acquisition payable ......................................................... -- 8,853
---------- ------------
Total current liabilities ................................................. 72,464 77,277
Long-term debt ................................................................. 148,000 139,500
Long-term affiliate note payable ............................................... 108,392 138,172
Long-term affiliate payable .................................................... 1,112 1,262
Other deferred liabilities ..................................................... 1,028 1,127
Deferred income taxes .......................................................... 148,164 147,029
Environmental liabilities ...................................................... 8,260 8,260
Minority interest .............................................................. -- 2,250
Commitments and contingencies
Partners' capital .............................................................. 607,111 589,682
---------- ------------
Total liabilities and partners' capital ................................... $1,094,531 $ 1,104,559
========== ============
</Table>

See accompanying notes.

WILLIAMS ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
RESTATED TO INCLUDE WILLIAMS PIPE LINE COMPANY, LLC
(IN THOUSANDS)
(UNAUDITED)

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
2002 2001
-------- --------

Operating Activities:
Net income ........................................................................ $ 21,126 $ 13,053
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ................................................... 8,964 9,041
Debt issuance costs amortization ................................................ 95 --
Deferred compensation expense ................................................... 998 --
Deferred income taxes ........................................................... 1,135 1,219
Gain on sale of assets .......................................................... (1,017) --
Changes in components of operating assets and liabilities:
Accounts receivable and other accounts receivable ............................. (1,210) 10,861
Affiliate accounts receivable ................................................. 4,017 15,812
Inventories ................................................................... 4,982 (6,769)
Accounts payable .............................................................. (3,213) (3,328)
Affiliate accounts payable .................................................... 5,902 6,345
Accrued income taxes due affiliate ............................................ 2,639 (721)
Accrued affiliate payroll and benefits ........................................ (2,123) (3,135)
Accrued taxes other than income ............................................... 272 5,695
Accrued interest payable ...................................................... (108) --
Current and noncurrent environmental liabilities .............................. (150) 843
Other current and noncurrent assets and liabilities ........................... (4,907) 780
-------- --------
Net cash provided by operating activities ................................... 37,402 49,696

Investing Activities:
Additions to property, plant and equipment ........................................ (9,110) (8,901)
Purchase of business .............................................................. (8,854) --
Proceeds from sale of assets ...................................................... 1,041 --
Other ............................................................................. -- (66)
-------- --------
Net cash used by investing activities ........................................... (16,923) (8,967)

Financing Activities:
Distributions paid ................................................................ (6,861) --
Borrowings under credit facility .................................................. 8,500 90,100
Capital contributions by affiliate ................................................ 1,975 2,737
Sales of common units to public (less underwriters' commissions and payment of
formation costs) ................................................................ -- 89,362
Debt placement costs .............................................................. -- (909)
Redemption of 600,000 common units from affiliate ................................. -- (12,060)
Payments on affiliate note payable ................................................ (29,780) (202,515)
Cash advances from affiliate ...................................................... -- 5,226
-------- --------
Net cash used by financing activities ........................................... (26,166) (28,059)
-------- --------

Change in cash and cash equivalents .................................................. (5,687) 12,670
Cash and cash equivalents at beginning of period ..................................... 13,837 10
-------- --------
Cash and cash equivalents at end of period ........................................... $ 8,150 $ 12,680
======== ========

Supplemental non-cash investing and financing transactions:

Contributions by affiliate of predecessor company deferred income tax liability ... -- 13,789

Contribution of long-term debt to Partnership capital ............................. -- 59,695
-------- --------
Total ........................................................................... $ -- $ 73,484
======== ========
</Table>

See accompanying notes.

WILLIAMS ENERGY PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RESTATED TO INCLUDE WILLIAMS PIPE LINE COMPANY, LLC

1. BASIS OF PRESENTATION

In the opinion of management, the accompanying financial statements of
Williams Energy Partners L.P. (the "Partnership"), which include Williams Pipe
Line Company, LLC ("Williams Pipe Line"), which are unaudited, except for the
Balance Sheet as of December 31, 2001 which is derived from audited financial
statements, include all normal and recurring adjustments necessary to present
fairly the Partnership's financial position as of March 31, 2002 and the results
of operations for the three month periods ended March 31, 2002 and 2001. The
results of operations for the three months ended March 31, 2002 are not
necessarily indicative of the results to be expected for the full year ending
December 31, 2002.

On April 11, 2002, the Partnership acquired all of the membership interests
of Williams Pipe Line for approximately $1.0 billion. Williams Pipe Line is a
subsidiary of Williams and an affiliate company of the Partnership. Because of
our affiliate relationship with Williams Pipe Line, the transaction was between
entities under common control and, as such, will be accounted for similarly to a
pooling of interest. Accordingly, the following consolidated financial
statements and notes have been restated to reflect the historical results of
operations, financial position and cash flows of the companies on a combined
basis throughout the periods presented. Williams Pipe Line's operations are
reported as a separate operating segment of the Partnership.

The historical results for Williams Pipe Line include income and expenses
and assets and liabilities that were conveyed to and assumed by an affiliate of
Williams Pipe Line prior to its acquisition by the Partnership. The assets
principally include Williams Pipe Line's interest in and agreements related to
Longhorn Partners Pipeline ("Longhorn"), a discontinued refinery site at
Augusta, Kansas and the ATLAS 2000 software system. The liabilities principally
include the environmental liabilities associated with the discontinued refinery
site in Augusta, Kansas and the current and deferred income taxes and affiliate
note payable. The current and deferred income taxes and the affiliate note
payable were contributed to the Partnership in form of a capital contribution by
an affiliate of The William Companies, Inc. ("Williams"). The income and
expenses associated with Longhorn will not be included in the future financial
results of the Partnership. Also, as agreed between the Partnership and
Williams, Williams Pipe Line's blending operations, other than an annual
blending fee of approximately $3.0 million, will not be included in the future
financial results of the Partnership. In addition, general and administrative
expenses related to the Williams Pipe Line system that the Partnership will
reimburse to its General Partner will be limited to $30.0 million per year,
subject to an escalation provision.

Certain amounts in the financial statements for 2001 have been reclassified
to conform to the current period's presentation.

2. ORGANIZATION

Williams Energy Partners L.P. is a Delaware limited partnership that was
formed in August 2000, to own, operate and acquire a diversified portfolio of
complementary energy assets. Prior to the closing of the Partnership's initial
public offering in February 2001, Williams Energy Ventures, Inc. was owned by
Williams Energy Services, LLC ("WES"). Both WES and Williams Natural Gas
Liquids, Inc. are wholly owned subsidiaries of Williams. Williams GP LLC
("General Partner"), a Delaware limited liability company, was also formed in
August 2000, to serve as general partner for the Partnership.

Williams GP LLC serves as the General Partner for the Partnership. The
Partnership is the limited partner of the operating limited partnership and GP
Inc. serves as its General Partner.

3. SEGMENT DISCLOSURES

<Table>
<Caption>
THREE MONTHS ENDED MARCH 31, 2002
-----------------------------------------------------
WILLIAMS PETROLEUM AMMONIA
PIPE LINE PRODUCTS PIPELINE
SYSTEM TERMINALS SYSTEM TOTAL
----------- ----------- ----------- -----------
(IN THOUSANDS)

Revenues:
Third party customers ....................... $ 59,457 $ 15,546 $ 4,375 $ 79,378
Affiliate customers ......................... 18,969 4,301 -- 23,270
----------- ----------- ----------- -----------
Total revenues .............................. 78,426 19,847 4,375 102,648

Operating expenses .......................... 24,509 7,412 1,145 33,066
Product purchases ........................... 18,409 -- -- 18,409
Depreciation and amortization ............... 6,056 2,744 164 8,964
Affiliate general and administrative
expenses .................................. 10,229 2,677 551 13,457
----------- ----------- ----------- -----------
Segment profit .............................. $ 19,223 $ 7,014 $ 2,515 $ 28,752
=========== =========== =========== ===========
</Table>

<Table>
<Caption>
THREE MONTHS ENDED MARCH 31, 2001
-----------------------------------------------------
WILLIAMS PETROLEUM AMMONIA
PIPE LINE PRODUCTS PIPELINE
SYSTEM TERMINALS SYSTEM TOTAL
----------- ----------- ----------- -----------
(IN THOUSANDS)

Revenues:
Third party customers ....................... $ 70,533 $ 13,545 $ 2,688 $ 86,766
Affiliate customers ......................... 16,857 4,053 -- 20,910
----------- ----------- ----------- -----------
Total revenues .............................. 87,390 17,598 2,688 107,676

Operating expenses .......................... 29,235 7,177 943 37,355
Product purchases ........................... 27,844 -- -- 27,844
Depreciation and amortization ............... 5,935 2,944 162 9,041
Affiliate general and administrative expenses 8,295 2,016 267 10,578
----------- ----------- ----------- -----------
Segment profit .............................. $ 16,081 $ 5,461 $ 1,316 $ 22,858
=========== =========== =========== ===========
</Table>

4. RELATED PARTY TRANSACTIONS

Beginning with the closing date of the IPO, the General Partner, through
provisions included in the omnibus agreement, has limited the amount of general
and administrative costs charged to the Partnership. For the terminal and
ammonia pipeline operations, the current annual reimbursement limitation is $6.7
million. The additional general and administrative costs incurred by the General
Partner, but not charged to the Partnership, totaled $2.8 million for the three
months ended March 31, 2002 and $0.5 million for the period February 10, 2001
through March 31, 2001.

The Partnership has entered into a similar agreement with Williams
associated with the Williams Pipe Line acquisition. The Partnership and Williams
have agreed that the general and administrative expenses to be reimbursed by the
Partnership for Williams Pipe Line will be $30.0 million for 2002, prorated for
the actual number of months in 2002 that the Partnership will own Williams Pipe
Line. After 2002, these expenses will increase by the lesser of 2.5 percent per
year or the percent increase in the Consumer Price Index.

5. DEBT

During the periods shown, Williams Pipe Line was a participant in an
intercompany note with WES and Williams. Terms of the affiliate note required
payment on demand; however, Williams had no plans or intentions to demand
payment within the next twelve months. Under WES' cash management practices,
Williams Pipe Line shared banking arrangements with other WES subsidiaries.
Interest expense charges from WES were allocated to Williams Pipe Line based on
WES' subsidiaries intercompany balances. Interest rates were 2.6 percent and 6.1
percent at March 31, 2002 and 2001, respectively.

In conjunction with the acquisition of Williams Pipe Line, the Partnership
borrowed $700.0 million from a group of financial institutions. The note matures
in October 2002 and carries an interest rate of the Eurodollar rate plus 2.5
percent that is adjusted monthly. The rate increases to the Eurodollar rate plus
4.0 percent in August 2002 and is adjusted monthly through the maturity date.
The current interest rate on the note is 4.4 percent.

6. COMMITMENTS AND CONTINGENCIES

In connection with the Partnership's acquisition of Williams Pipe Line on
April 11, 2002, WES agreed to indemnify the Partnership for losses and damages
related to breach of environmental representations and warranties and the
failure to comply with environmental laws prior to closing in excess of $2.0
million up to a maximum of $125.0 million. This environmental indemnification
obligation applies to liabilities that result from operations prior to the
closing of the Partnership's acquisition of the Williams Pipe Line and that are
discovered within six years of closing.

Estimated liabilities for environmental remediation costs were $16.8
million and $16.9 million at March 31, 2002 and December 31, 2001, respectively.
Management estimates that expenditures associated with the accrued environmental
remediation liabilities will be paid over the next two to five years.
Receivables associated with these environmental liabilities of $5.1 million at
March 31, 2002 and December 31, 2001, respectively, have been recognized as
recoverable from affiliates and third parties. These estimates, provided on an
undiscounted basis, were determined based primarily on data provided by a
third-party environmental evaluation service. These liabilities have been
classified as current or non-current based on management's estimates regarding
the timing of actual payments. Environmental liabilities of $1.9 million
associated with a discontinued refinery site in Augusta, Kansas that were
previously part of Williams Pipe Line's operations were conveyed to and assumed
by a Williams affiliate prior to the acquisition of Williams Pipe Line by the
Partnership.

In conjunction with the 1999 acquisition of the Gulf Coast marine
terminals from Amerada Hess Corporation ("Hess"), Hess has disclosed to the
Partnership all suits, actions, claims, arbitrations, administrative,
governmental investigation or other legal proceedings pending or threatened,
against or related to the assets acquired by the Partnership, which arise under
environmental law. Hess agreed to indemnify the Partnership through July 30,
2014 against all known and required environmental remediation costs at the
Corpus Christi and Galena Park, Texas marine terminal facilities from any
matters related to pre-acquisition actions. Also, in the event that any
pre-acquisition releases of hazardous substances at the Partnership's Corpus
Christi and Galena Park, Texas and Marrero, Louisiana marine terminal facilities
are identified by the Partnership prior to July 30, 2004, the Partnership will
be liable for the first $2.5 million of environmental liabilities, Hess will be
liable for the next $12.5 million of losses, and the Partnership will assume
responsibility for any losses in excess of $15.0 million. Hess has indemnified
the Partnership for a variety of pre-acquisition fines and claims that may be
imposed or asserted against the Partnership

under certain environmental laws. At both December 31, 2001 and December 31,
2000, the Partnership had accrued $0.6 million for costs that may not be
recoverable under Hess' indemnification.

During 2001, the Partnership recorded an environmental liability of $2.6
million at its New Haven, Connecticut facility, which was acquired in September
2000. This liability was based on third-party environmental engineering
estimates completed as part of a Phase II environmental assessment, routinely
required by the State of Connecticut to be conducted by the purchaser following
the acquisition of a petroleum storage facility. The Partnership will complete a
Phase III environmental assessment at this facility during the second or third
quarter of 2002, and the environmental liability could change materially based
on this more thorough analysis. The seller of these assets agreed to indemnify
the Partnership for certain of these environmental liabilities. In addition, the
Partnership purchased insurance for up to $25.0 million of environmental
liabilities associated with these assets, which carries a deductible of $0.3
million. Any environmental liabilities at this location not covered by the
seller's indemnities and not covered by insurance are covered by the
WES environmental indemnifications to the Partnership, subject to the $15.0
million limitation.

WNGL will indemnify the Partnership for right-of-way defects or failures in
the Partnership's ammonia pipeline easements for 15 years after the initial
public offering closing date. WES has also indemnified the Partnership for
right-of-way defects or failures associated with the marine terminal facilities
at Galena Park and Corpus Christi, Texas and Marrero, Louisiana for 15 years
after the initial public offering closing date. In addition, WES has indemnified
the Partnership for right-of-way defects or failures in Williams Pipe Line's
easements for 10 years after the closing date of its acquisition by the
Partnership up to a maximum of $125.0 million with a deductible of $6.0 million.

7. RESTRICTED UNITS

In April 2001, the General Partner issued grants of 92,500 restricted
units, as referred to as phantom units, to certain key employees associated with
the Partnership's initial public offering in February 2001. These one-time
initial public offering phantom units will vest over a 34-month period ending on
February 9, 2004, and are subject to forfeiture if employment is terminated
prior to vesting. These units are subject to early vesting if the Partnership
achieves certain performance measures. The Partnership achieved the first of two
performance measures in February 2002 and as a result, 46,250 of the phantom
units vested, resulting in a charge to compensation expense of approximately
$1.0 million. The Partnership recognized additional compensation expense of $0.2
million related to the remaining non-vested units associated with these grants
in the three months ended March 31, 2002. The fair market value of the phantom
units associated with this grant was $2.8 million on the grant date.

for the three months ended March 31, 2002. The fair market value of the phantom
units associated with this grant was $5.0 million on March 31, 2002.

8. DISTRIBUTIONS

Distributions paid by the Partnership, excluding amounts attributable to
Williams Pipe Line, during 2001 and 2002 are as follows:

<Table>
<Caption>
Date
Cash Per Unit Cash Total
Distribution Distribution Cash
Paid Amount Distribution
------------ ------------- ------------

05/15/01(a) $0.2920 $3.4 million
08/14/01 $0.5625 $6.5 million
11/14/01 $0.5775 $6.7 million
02/14/02 $0.5900 $6.9 million
05/15/02(b) $0.6125 $7.2 million
</Table>

(b) The General Partner declared this cash distribution on April 22, 2002
to be paid on May 15, 2002, to unitholders of record at the close of business on
May 2, 2002.

9. NET INCOME PER UNIT

The following table provides details of the basic and diluted net income
per unit computations (in thousands, except per unit amounts):

<Table>
<Caption>
FOR THE THREE MONTHS ENDED MARCH 31, 2002
-------------------------------------------
INCOME UNITS PER UNIT
(NUMERATOR) (DENOMINATOR) AMOUNT
------------ ------------ ------------

Limited partners' interest in net income .............. $ 8,265

Basic net income per common and subordinated unit ..... $ 8,265 11,359 $ 0.73

Effect of dilutive restrictive unit grants ............ -- 48 (0.01)
------------ ------------ ------------
Diluted net income per common and subordinated unit ... $ 8,265 11,407 $ 0.72
============ ============ ============
</Table>

Units reported as dilutive securities are related to restricted unit grants
associated with the one-time initial public offering award (see Note 7).

10. SUBSEQUENT EVENTS

On April 11, 2002, the Partnership acquired Williams Pipe Line Company from
a subsidiary of Williams for approximately $1.0 billion. The Partnership
remitted to WES cash consideration in the amount of $674.4 million and WES
retained $15.0 million of Williams Pipe Line's receivables. The $310.6 million
balance of the purchase price consisted of $304.4 million of Class B units
representing limited partner interests in the Partnership and the contribution
to the Partnership by Williams GP LLC of $6.2 million to maintain its 2.0
percent general partner interest. To initially fund the acquisition, the
Partnership borrowed $700.0 million under a six-month loan from a group of
financial institutions consisting of Bank of America, N.A., Citibank, N.A., J.P.
Morgan Chase Bank,

Lehman Brothers Inc. and Merrill Lynch Credit Corporation. From these funds, the
Partnership paid transaction fees and costs of $10.6 million, remitted $674.4
million to WES and retained $15.0 million for working capital requirements. The
Partnership expects to replace this interim financing in the future with
permanent financing in the form of additional equity and long-term debt.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS RESTATED TO INCLUDE
WILLIAMS PIPE LINE COMPANY, LLC

INTRODUCTION

Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the consolidated financial
statements and notes thereto. Williams Energy Partners L.P. is a publicly traded
limited partnership formed by The Williams Companies, Inc. ("Williams") to own,
operate and acquire a diversified portfolio of complementary energy assets. We
are principally engaged in the transportation, storage and distribution of
refined petroleum products and ammonia. During the first quarter of 2002, our
asset portfolio consisted of:

- five marine terminal facilities;

- 25 inland terminals (some of which are partially owned); and

- an ammonia pipeline system.

RECENT DEVELOPMENTS

On April 22, 2002, our general partner declared an increase in the quarterly
cash distribution from $0.59 to $0.6125 per common and subordinated unit,
representing a 3.8 percent increase over the previous quarter's distribution and
a 16.7 percent increase since our initial public offering in February 2001. The
distribution increase is for the period of January 1 through March 31, 2002. The
distribution will be paid on May 15, 2002 to unitholders of record at the close
of business on May 2, 2002.

On April 11, 2002, we acquired Williams Pipe Line Company, LLC ("Williams
Pipe Line") from a subsidiary of Williams for approximately $1.0 billion.
Williams Pipe Line owns the Williams Pipe Line system, which consists of a
6,700-mile refined petroleum products pipeline with 39 related storage and
distribution terminal assets. We remitted to Williams Energy Services, LLC
("WES") cash consideration in the amount of $674.4 million and WES retained
$15.0 million of Williams Pipe Line's receivables. The $310.6 million balance of
the purchase price consisted of $304.4 million of Class B units representing
limited partner interests in the Partnership and the contribution to the
Partnership by Williams GP LLC of $6.2 million to maintain its 2.0 percent
general partner interest. To initially fund the acquisition, we borrowed $700.0
million under a six-month loan from a group of financial institutions consisting
of Bank of America, N.A., Citibank, N.A., J.P. Morgan Chase Bank, Lehman
Brothers Inc. and Merrill Lynch Credit Corporation. From these funds, we paid
transaction fees and costs of $10.6 million, remitted $674.4 million to WES and
retained $15.0 million for working capital requirements. We expect to replace
this interim financing in the future with permanent financing in the form of
additional equity and long-term debt.

Williams Pipe Line Company was a subsidiary of Williams and is thus
considered to be an affiliate of ours. Because of our affiliate relationship,
the acquisition was between entities under common control and, as such, was
accounted for similarly to a pooling of interest. Accordingly, the consolidated
financial statements and notes have been restated to reflect the historical
results of operations, financial position and cash flows of the companies on a
combined basis throughout the periods presented. The historical results for
Williams Pipe Line include income and expenses and assets and liabilities that
were conveyed to and

assumed by an affiliate of Williams Pipe Line prior to our acquisition of it.
These assets primarily include Williams Pipe Line's interest in and agreements
related to Longhorn Partners Pipeline ("Longhorn"), a discontinued refinery site
at Augusta, Kansas and the ATLAS 2000 software system. The results from these
assets will not be included in our future financial results. In addition,
Williams Pipe Line's blending operations, other than an annual blending fee of
approximately $3.0 million, will not be included in our future financial
results. The Williams Pipe Line system's operations will be reported as a
separate operating segment.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO MARCH 31, 2001

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
---------------------
2002 2001
--------- ---------
($ in millions)

FINANCIAL HIGHLIGHTS
Revenues:
Williams Pipe Line system transportation and related activities ........ $ 56.6 $ 57.5
Petroleum products terminals ........................................... 19.8 17.6
Ammonia pipeline system ................................................ 4.4 2.7
--------- ---------
Revenues excluding product and construction revenues ................ $ 80.8 $ 77.8
Williams Pipe Line system product and construction revenues ............ 21.8 29.9
--------- ---------
Total revenues ...................................................... $ 102.6 $ 107.7
Operating expenses:
Williams Pipe Line system transportation and related activities ........ $ 24.5 $ 29.3
Petroleum products terminals ........................................... 7.5 7.2
Ammonia pipeline system ................................................ 1.1 0.9
--------- ---------
Operating expenses excluding product purchases ...................... $ 33.1 $ 37.4
Williams Pipe Line system product purchases ............................ 18.4 27.8
--------- ---------
Total operating expenses ............................................ $ 51.5 $ 65.2
--------- ---------
Total operating margin .............................................. $ 51.1 $ 42.5
========= =========

OPERATING STATISTICS
Williams Pipe Line system:
Transportation revenue per barrel shipped (cents per barrel) ........... 88.4 90.5
Transportation barrels shipped (million barrels) ....................... 52.1 53.2
Barrel miles (billions) ................................................ 14.5 15.4
Petroleum products terminals:
Marine terminal facilities:
Average storage capacity utilized per month (barrels in millions) ... 16.0 15.2
Throughput (barrels in millions) (a) ................................ 5.0 3.3
Inland terminals:
Throughput (barrels in millions) .................................... 13.9 11.7
Ammonia pipeline system:
Volume shipped (tons in thousands) ..................................... 257 160
</Table>

- ----------
(a) For the three months ended March 31, 2002, represents throughput at the
Gibson and New Haven marine facilities. As the Gibson facility was acquired
in October 2001, the three months ended March 31, 2001 represents
throughput at the New Haven facility only.

Combined revenues excluding product and construction revenues for the three
months ended March 31, 2002 were $80.8 million compared to $77.8 million for the
three months ended March 31, 2001, an increase of $3.0 million, or 4 percent.
This increase was a result of:

o a decrease in Williams Pipe Line system's transportation and related
activities revenues of $0.9 million, or 2 percent. This decrease was primarily
attributable to reduced transportation volumes and lower weighted-average
tariffs. Demand for distillate, utilized in the farming industry as a fuel oil,
was lower as farmers took advantage of the warm weather during late 2001 to
begin working their fields versus waiting until the first quarter of 2002. In
addition, gasoline volumes were slightly lower due to competitive market
conditions. The transportation revenue per barrel shipped declined due to our
customers transporting products a shorter distance which results in a lower
tariff;

o an increase in petroleum products terminals revenues of $2.2 million, or
13 percent, primarily due to the acquisition of the Gibson marine facility that
was acquired in October 2001 and the two Little Rock inland terminals that were
acquired in June 2001. Further, revenues increased due to the initiation of jet
fuel service to Dallas Love Field, partially offset by lower throughput volumes
at several of our inland terminals due to unfavorable market conditions;

o an increase in ammonia pipeline system revenues of $1.7 million, or 63
percent, primarily due to a 97,000 ton, or 61 percent, increase in ammonia
shipped through our pipeline. Natural gas is the primary component for the
production of ammonia. As the price of natural gas has declined to more
historical levels, our customers have elected to produce and ship more ammonia
through our pipeline.

Operating expenses excluding product purchases for the three months ended
March 31, 2002 were $33.1 million compared to $37.4 million for the three months
ended March 31, 2001, a decrease of $4.3 million, or 12 percent. This decrease
was a result of:

o a decrease in Williams Pipe Line system expenses of $4.8 million, or 16
percent, primarily due to reduced power associated with less volume transported,
lower property taxes and reduced environmental expenses;

o an increase in petroleum products terminals expenses of $0.3 million, or
4 percent, primarily due to the addition of the Gibson marine facility and the
Little Rock inland terminals;

o an increase in ammonia pipeline system expenses of $0.2 million primarily
due to higher property taxes and increased costs associated with greater volume
shipments.

Revenues from product sales were $21.6 million for the three months ended
March 31, 2002, while product purchases were $18.4 million, resulting in a net
margin of $3.2 million in 2002. The 2002 net margin represents an increase of
$1.5 million compared to a net margin in 2001 of $1.7 million resulting from
product sales in 2001 of $29.5 million and product purchases of $27.8 million.
This increase was due to lower average product costs in the current quarter.

Affiliate construction and management fee revenues for the three months
ended March 31, 2002 were $0.2 million compared to $0.4 million for the three
months ended March 31, 2001. Williams Pipe Line received a fee to manage
Longhorn and to provide consulting services associated with the pipeline's
construction and start-up, as needed. During 2002, no consulting services were
rendered.

Depreciation and amortization expense for the three months ended March 31,
2002 was unchanged from 2001 at $9.0 million. Additional depreciation associated
with acquisitions and capital improvements was offset by lower depreciation on
existing assets.

General and administrative expenses for the three months ended March 31,
2002 were $13.5 million compared to $10.6 million for the three months ended
March 31, 2001, an increase of $2.9 million, or 27 percent. For our petroleum
products terminals and ammonia pipeline system, general and administrative
expenses are allocated from Williams as defined by the omnibus agreement. For
2002, these expense allocations were limited to $1.7 million per quarter plus
actual incentive compensation expenses related to Williams Energy Partners'
performance. The amount of general and administrative expenses incurred by the
General Partner but not allocated to us was $2.8 million for the three months
ended March 31, 2002. Incentive compensation costs associated with our long-term
incentive plan are specifically excluded from the expense limitation and were
$1.5 million during the three months ended March 31, 2002. The current quarter
incentive compensation costs included a $1.0 million charge associated with the
early vesting of a

portion of the phantom units issued to key employees at the time of our initial
public offering. The early vesting was triggered as a result of our growth in
cash distributions paid to unitholders. Williams Pipe Line was allocated general
and administrative costs from Williams during these periods based on a
three-factor formula that considers operating margin, payroll costs and
property, plant and equipment. The amounts allocated to Williams Pipe Line were
$10.2 million during the three months ended March 31, 2002 compared to $8.3
million for 2001. The limit on general and administrative expenses that can be
charged by our general partner to us will continue to be adjusted in the future
to reflect additional general and administrative expenses associated with
completed acquisitions. Following the acquisition of Williams Pipe Line, we
expect the aggregate limit to be $9.2 million per quarter plus long-term
incentive compensation expenses.

Net interest expense for the three months ended March 31, 2002 was $0.8
million compared to $4.3 million for the three months ended March 31, 2001. The
decline in interest expense was primarily related to the partial payment and
cancellation of an affiliate note in connection with the closing of our initial
public offering on February 9, 2001. In addition, the average interest rate on
borrowings has declined significantly from 6.1 percent at March 31, 2001 to 2.6
percent at March 31, 2002.

We do not pay income taxes because we are a partnership. However, Williams
Pipe Line was subject to income taxes prior to our acquisition of it in April
2002, and our pre-IPO earnings in 2001 were also taxable. We primarily based our
income tax rate of 38.2 percent and 37.9 percent for the three months ended
March 31, 2002 and 2001, respectively, upon the effective income tax rate for
Williams. The effective income tax rate exceeds the U.S. federal statutory
income tax rate primarily due to state income taxes.

Net income for the three months ended March 31, 2002 was $21.1 million
compared to $13.1 million for the three months ended March 31, 2001, an increase
of $8.0 million, or 61 percent. The operating margin increased by $8.7 million
during the period, largely as a result of reduced operating expenses for the
Williams Pipe Line system and enhanced earnings from the acquisitions of the
Little Rock and Gibson terminal facilities and increased volumes on the ammonia
system. General and administrative expenses increased by $2.9 million while net
interest expenses decreased by $3.5 million. Other income increased $0.7 million
primarily due to a gain on the sale of land, and income taxes increased $2.1
million primarily due to the increase in Williams Pipe Line's operating income.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS AND CAPITAL EXPENDITURES

Net cash provided by operating activities for the three months ended March
31, 2002 was $37.4 million compared to $49.7 million for the three months ended
March 31, 2001. The $12.3 million decrease in cash from 2001 to 2002 was
primarily a result of changes in our affiliate and accounts receivable balances.
Prior to 2001, some of Williams Pipe Line's affiliates did not remit payment
each month associated with intercompany receivables, allowing the balances to
build. Beginning in 2001, these affiliate accounts receivable balances were paid
each month, resulting in a large cash inflow during the first quarter of 2001 to
eliminate the accumulated balance. In addition, 2001 further benefited from the
collection of a significant accounts receivable balance associated with a
one-time service provided to a third party. This cash decline was partially
offset by changes in our inventory balances due primarily to changes in product
prices. These working capital changes were partially offset by increased net
income before depreciation and deferred compensation costs due to enhanced
results from our existing assets and acquisitions.

Net cash used by investing activities for the three months ended March 31,
2002 and 2001 was $16.9 million and $9.0 million, respectively. Investing
activities in 2002 include $8.9 million for the purchase of the natural gas
liquids pipeline from Aux Sable in December 2001. Maintenance capital for the
period ended March 31, 2002 was $7.7 million, compared with $4.6 million during
2001. Please see Capital Requirements below for more discussion of capital
expenditures.

Net cash used by financing activities for the three months ended March 31,
2002 and 2001 was $26.2 million and $28.1 million, respectively. The cash used
for the first three months of 2002 principally involved the partial repayment of
an affiliate note by Williams Pipe Line. The cash inflow in the first three
months of 2001 is comprised of proceeds from equity and debt issued at the time
of our initial public

offering used to repay an affiliate note. In addition, Williams Pipe Line also
partially repaid an affiliate note during 2001.

CAPITAL REQUIREMENTS

o maintenance capital expenditures, such as those required to maintain
equipment reliability and safety and to address environmental
regulations; and

o expansion capital expenditures to acquire additional complementary
assets to grow its business and to expand or upgrade its existing
facilities, such as projects that increase storage or throughput
volumes or develop pipeline connections to new supply sources.

Williams has agreed to reimburse us for maintenance capital expenditures
incurred in 2001 and 2002 in excess of $4.9 million per year related to the
assets contributed to us at the time of our initial public offering. This
reimbursement obligation is subject to a maximum combined reimbursement for 2001
and 2002 of $15.0 million. We incurred $8.8 million of maintenance capital
expenditures in 2001 and recorded a reimbursement from Williams of $3.9 million
during 2001. As a result of these reimbursements, the maximum reimbursement
obligation of Williams with respect to these assets has been reduced to $11.1
million for 2002. For 2002 we expect to incur maintenance capital expenditures
for these assets of approximately $16.0 million.

In connection with the acquisition of the Williams Pipe Line system,
Williams has agreed to reimburse us for maintenance capital expenditures
incurred in 2002, 2003 and 2004 in excess of $19.0 million per year related to
the Williams Pipe Line system, subject to a maximum combined reimbursement for
2002, 2003 and 2004 of $15.0 million. In 2002, we expect to incur maintenance
capital expenditures related to the Williams Pipe Line system of approximately
$16.8 million and, therefore, do not anticipate that we will be reimbursed for
such expenditures.

We expect to incur aggregate maintenance capital expenditures for 2002 for
all of our businesses, net of reimbursements from Williams, of $21.7 million.

In addition to maintenance capital, we are also planning to incur expansion
and upgrade capital expenditures at its existing facilities, including pipeline
connections. The total we plan to spend for expansion is approximately $7.0
million in 2002, not including capital needs associated with additional
acquisitions, if any. We expect to fund our expansion capital expenditures,
including any acquisitions, from:

o cash provided by operations;

o borrowings under the revolving credit facility discussed below and
other borrowings; and

o the issuance of additional common and other classes of equity units.

LIQUIDITY

Operating Partnership Credit Facility. Subsequent to the closing of our
initial public offering on February 9, 2001, we have relied on cash generated
from internal operations as our primary source of funding for uses other than
expansion capital expenditures. Additional funding requirements are met by a
$175.0 million credit facility of our operating partnership that expires on
February 5, 2004. This credit facility is comprised of a $90.0 million term loan
and an $85.0 million revolving credit facility. The revolving credit facility is
comprised of a $73.0 million acquisition sub-facility and a $12.0 million
working capital sub-facility. As of March 31, 2002, $15.0 million was available
under the acquisition sub-facility and $12.0 million was available under the
working capital sub-facility.

The credit facility contains various operational and financial covenants.
Management believes that we are in compliance with all of these covenants.

Williams Pipe Line Short-term Loan. In connection with the acquisition of
the Williams Pipe Line system, we and our subsidiary, Williams Pipe Line,
entered into a six-month $700.0 million credit agreement. All of the proceeds
were used to finance this acquisition.

Our obligations under this short-term loan are unsecured. This indebtedness
ranks equally with all of our outstanding unsecured and unsubordinated debt. Our
operating partnership is not a borrower under this credit agreement. We may
prepay this short-term loan at any time, in whole or in part, without penalty.
This indebtedness will bear interest, at our election, at the Eurodollar rate
plus 2.5 percent, or the prime rate plus 1.5 percent, for the first 120 days of
the short-term loan and, thereafter, at the Eurodollar rate plus 4.0 percent, or
the prime rate plus 3.0 percent.

In addition, the credit agreement contains various covenants limiting our
and Williams Pipe Line's ability to:

o incur additional unsecured indebtedness other than under our operating
partnership's credit facility described above;

o grant liens other than tax liens, mechanic's and materialman's liens
and other liens and encumbrances incurred in the ordinary course of
their business;

o make investments, other than investments in the Williams Pipe Line
system, cash and short-term securities and acquisitions;

o merge or consolidate;

o dispose of their assets;

o make distributions other than from available cash or, in the case of
Williams Pipe Line, in excess of $7.5 million in each quarter;

o engage in any business other than the transportation, storage and
distribution of hydrocarbons and ammonia;

o create obligations for some lease payments; or

o engage in transactions with affiliates other than arm's-length
transactions.

The credit agreement also contains a covenant requiring Williams Pipe Line
to maintain EBITDA (as defined in the credit agreement) of at least $20.0
million for each fiscal quarter.

RELATED PARTY TRANSACTIONS

We have entered into a number of commercial agreements with affiliates,
including Williams Energy Marketing & Trading Company and Williams Refining &
Marketing, L.L.C., Williams Ethanol Services, Inc. and Mid-America Pipeline
Company. Each of these entities is a subsidiary of Williams and an affiliate of
ours and of our general partner. The principal business of Williams Energy
Marketing & Trading is the marketing and trading of energy commodities including
natural gas, natural gas liquids, power, crude oil and refined petroleum
products. Williams Refining & Marketing primarily owns and operates a refinery
in Memphis, Tennessee and also engages in the purchase and sale of crude and
refined petroleum products. Williams Ethanol Services operates two ethanol plans
and an ethanol distribution system and also engages in the purchase and sale of
ethanol. Mid-America Pipeline is an interstate common carrier pipeline company
engaged in the transportation and distribution of natural gas liquids.

The agreements with our affiliates vary depending upon location and the
types of services provided. Approximately $4.3 million of our revenues for the
three months ended March 31, 2002 was generated from agreements with affiliates
at our petroleum products terminals while approximately $19.0 million of
revenues for the three months ended March 31, 2002 were generated from
agreements with affiliates on the

Williams Pipe Line system. In addition, approximately, $18.4 million of expenses
were incurred from product purchases with our affiliates on the Williams Pipe
Line system. A summary of the significant agreements follows:

The Williams Pipe Line System

Tariff-Based Shipments. Williams Energy Marketing & Trading and Williams
Refining & Marketing ship refined petroleum products on our pipeline system. We
charge rates for the shipments based upon tariffs filed with the FERC or the
applicable state agency that are the same rates we charge to non-affiliated
entities. These tariffs serve as individual contractual agreements that commit
our affiliate to pay for volume transported on our system as long as we abide by
the terms of the tariff. As a result, contracts do not exist that obligate our
affiliates to ship volume or make payments to us in the future.

System Lease Storage Agreements. We have entered into several agreements
with Williams Energy Marketing & Trading and Williams Refining & Marketing for
the access and utilization of storage along the Williams Pipe Line system. These
agreements provide for a fixed monthly storage capacity on the pipeline system
at a fixed rate. The rates charged to our affiliates are consistent with those
charged to non-affiliated entities. Services provided under these agreements
include the receipt of refined petroleum products into our system at any origin
point on our system. Our affiliates remain responsible for tariff charges
related to the actual shipment of product and delivery through our terminals. A
majority of these contracts have a term of one to two years. Historically, at
the end of the contract term, we have extended the agreements for one to two
additional years.

Ethanol Storage and Throughput Agreements. We have entered into several
agreements with Williams Ethanol Services for the access and utilization of
storage along the Williams Pipe Line system. These agreements provide for a
fixed monthly ethanol storage capacity at our terminals at a fixed storage rate.
In addition, we charge additional fees ranging from $0.80 per barrel to over
$1.25 per barrel for blending services and handling fees at certain terminals.
The rates charged to our affiliates are consistent with those charged to
non-affiliated entities. A majority of these contracts have a term ranging from
less than one year and up to two years.

Facility Rental Agreement. We have entered into an agreement to lease to
Mid-America Pipeline approximately 292 miles of pipeline, three active pump
stations and a propane storage and loading facility in Canton, South Dakota.
Mid-America Pipeline is responsible for utilities and other operating costs. The
agreement was entered into in 1998 and has been renewed yearly since that time.
The rate charged for this lease has not changed from year to year.

System Services Agreements. We have entered into agreements with Williams
Energy Marketing & Trading, Williams Refining & Marketing and Williams Ethanol
Services providing them with a non-exclusive and non-transferable license to use
the ATLAS 2000 software system. The system can be utilized to access data for
monitoring shipment and inventory status and performing other functions related
to shipment activities. The agreements established fixed rates at which certain
services are provided.

Over & Short Settlement and Product Purchases and Sales Agreements. We have
entered into agreements with Williams Energy Marketing & Trading to buy natural
gas liquids blendstocks and sell the refined petroleum products related to our
blending program and to purchase or sell us refined petroleum products needed to
maintain inventory balances on our pipeline system (which we refer to as over
and short settlements). These transactions are subject to master purchase and
sale agreements for refined petroleum products or a master purchase agreement
for natural gas liquids. Each transaction with our affiliate is recorded on a
confirmation statement, which is subject to the general terms outlined in the
master agreements. These confirmation statements determine the volume, price and
timing associated with the product purchases and sales. Because the confirmation
statements are generally associated with discrete transactions over short time
frames, contracts do not exist that obligate our affiliate to buy or sell
refined petroleum products or natural gas liquids to us in the future.
Additional details related to the activities that produce the purchase and sale
opportunities are as follows:

o Blending. Historically, Williams Pipe Line purchased natural gas
liquids from Williams Energy Marketing & Trading at cost plus a fixed
fee of $0.105 per barrel. Williams Energy Marketing & Trading
purchased at prevailing market prices a majority of the finished
gasoline that was produced from blending. In connection with the
acquisition of the Williams Pipe Line system, we and

Williams Energy Services agreed that the Williams Pipe Line system
will no longer take title to the natural gas liquids it blends or the
resulting product. We will continue to perform these blending services
for Williams Energy Services under a ten-year agreement for an annual
fee of approximately $3.0 million.

o Over and Short Settlement. Generally, the physical volumes on our
system will not match the balances recorded by our customers. These
differences are either product quality differences or absolute volume
differences. Quality differences usually result from the commingling
of product on the pipeline during times when we change the product
being shipped on our pipeline. When these differences occur, we
purchase and sell product at prevailing market prices from our
affiliate to manage the imbalances.

Longhorn Partners Pipeline Construction Revenue Agreement. Williams Pipe
Line entered into agreements with Longhorn Partners Pipeline to provide
engineering, design, construction, start-up and pipeline operating services.
Under these agreements, Williams Pipe Line was reimbursed for costs incurred and
received contractor and operating fees. In connection with our acquisition of
Williams Pipe Line, these agreements were transferred to another affiliate of
Williams and consequently we will no longer provide these services and receive
these fees.

Mid-America Pipeline Agreements. We have entered into agreements to lease
from Mid-America Pipeline underground natural gas liquids storage in Kansas, to
ship natural gas liquids on Mid-America Pipeline at published tariffs and to
lease from Mid-America Pipeline approximately 15 miles of pipeline in Illinois.
The natural gas liquids storage leases are typically renewed yearly, and the
pipeline lease has a term of ten years. Any tariff-based shipments are subject
to the prevailing tariff and are not subject to any other contract.

Natural Gas and Fuel Oil Supply Agreements. We have entered into agreements
with Williams Energy Marketing & Trading and Williams Refining & Marketing for
the supply of natural gas and fuel oil used at pump stations throughout the
Williams Pipe Line system. We purchase fuel oil from Williams Refining &
Marketing at the prevailing market price. These purchases are identified on
confirmation statements that are subject to the master refined products purchase
and sale agreements used in the blending and over and short program. We purchase
natural gas from Williams Energy Marketing & Trading either based on indexed
prices or at fixed prices. In 2001, we elected to purchase a majority of our
natural gas at fixed prices, which required that we commit to a definite volume
of natural gas purchases. Long-term volume commitments are not required for
index-based pricing. The natural gas purchase agreement expires in August 2002.
At that time, we expect to enter into a new agreement with Williams Energy
Marketing & Trading on terms similar to those in the existing contract.

Petroleum Products Terminals

OMNIBUS AGREEMENT

At the time of our initial public offering, we entered into an agreement
with Williams and its affiliates, including Williams GP LLC. Those parties
amended the omnibus agreement in connection with our acquisition of the Williams
Pipe Line system as described below.

COMPETITION

Williams and its affiliates have agreed that they will not, for as long as
Williams GP LLC or any other affiliate of Williams is our general partner:

- until April 1, 2005:

- engage in or acquire any business having assets involved in the
transportation of refined petroleum products to a delivery point that is
within a 50-mile radius of a delivery point owned or supplied by us; or

- engage in the transportation of refinery grade butane from certain
Midwestern refineries.

We refer to the assets described above as "restricted assets."
Notwithstanding the foregoing, Williams is not prohibited from owning or
operating any restricted assets owned, leased or operated by them as of April
11, 2002.

We have agreed that we will not, for as long as Williams GP LLC or any
other affiliate of Williams is our general partner, or until April 1, 2005 if
earlier:

- engage in or acquire any business having assets involved in the
transportation of natural gas liquids to a delivery point that is within
a 50-mile radius of a delivery point owned or supplied by us;

- engage in or acquire any business having assets involved in the
transportation of propane into our terminal in Carthage, Missouri other
than on Williams' Mid-America Pipe Line;

- engage in or acquire any business having assets involved in the
transportation of blendstocks into the El Dorado, Kansas connection to
the Williams Pipe Line other than on Williams' Mid-America Pipe Line; or

- construct or acquire any connection to the Cochin pipeline system,
located in western Canada and the upper midwestern United States.

GENERAL AND ADMINISTRATIVE EXPENSES

The initial amount of general and administrative expenses incurred by
Williams to be reimbursed by us that relate exclusively to the Williams Pipe
Line system will not exceed $30.0 million for the year ended 2002, as pro rated
from the acquisition date. In each subsequent year through 2017, this baseline
amount (as it may have been previously adjusted) may increase by no more than
the lesser of 2.5 percent or the percentage increase in the consumer price index
for that year.

INDEMNIFICATION

Williams will indemnify us for environmental liabilities related to
Williams Pipe Line as described above.

MAINTENANCE CAPITAL EXPENDITURES

In 2002, 2003 and 2004, Williams will reimburse us for annual maintenance
capital expenditures related to the Williams Pipe Line system in excess of $19.0
million in any of those years, subject to a maximum aggregate reimbursement of
$15.0 million over this three-year period.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

Exhibit 10.1 AMENDMENT NO. 1 TO AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF WILLIAMS ENERGY PARTNERS L.P.

Exhibit 10.2 SECOND AMENDMENT TO OMNIBUS AGREEMENT

(b) Reports on Form 8-K:

The Partnership filed on Form 8-K on May 3, 2002 restated
Management's Discussion and Analysis of Financial Condition and Results
of Operations and consolidated financial statements and notes to
reflect the results of operations, financial position and cash flows as
if the Partnership and Williams Pipe Line Company had been combined
throughout the periods presented.

The Partnership's earnings for the three months ended March 31, 2002
and 2001 were issued on Form 8-K on April 29, 2002.

The Partnership filed the following financial statements associated
with its purchase of all the membership interests of Williams Pipe Line
Company for $1 billion effective April 11, 2002 on Form 8-K on April
19, 2002:

o Unaudited pro forma balance sheet as of December 31, 2001,
and unaudited pro forma statement of income for the year
ended December 31, 2001.

o The consolidated balance sheets of Williams Pipe Line
Company, LLC as of December 31, 2001 and 2000, and the
related consolidated statements of income and member's
equity and cash flows for each of the three years in the
period ended December 31, 2001, with report of independent
auditors.

The Partnership reported that The Williams Companies, Inc. had
announced that it closed the sale of Williams Pipe Line Company to the
Partnership for $1 billion on Form 8-K on April 11, 2002.

The Partnership announced that it was pursuing the acquisition of
Williams Pipe Line Company from The Williams Companies, Inc. for at
least $900 million on Form 8-K on March 8, 2002.

The Partnership's earnings for the twelve months ended December 31,
2001 and 2000 were issued on Form 8-K on January 30, 2002.

The Partnership filed the following financial statements associated
with its purchase of the crude oil and storage assets of Geonet
Gathering, Inc. for $20.0 million effective October 31, 2001 on Form
8-K/A on January 14, 2002:

o Pro forma balance sheet as of September 30, 2001 and pro
forma statements of income for the year ended December 31,
2000 and the nine months ended September 30, 2001.

o The financial statements with report of independent
accountants for Geonet Gathering, Inc. as of and for the
year ended December 31, 2000 and the interim financial
statements as of and for the nine months ended September 30,
2001.

The Partnership reported that it had purchased a natural gas
liquids pipeline from Aux Sable Liquid Products L.P. for $8.9 million
on Form 8-K on January 3, 2002.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, in Tulsa, Oklahoma, on May 10, 2002.

WILLIAMS ENERGY PARTNERS L.P.

By: Williams GP LLC
its General Partner

/s/ Don R. Wellendorf
--------------------------------
Don R. Wellendorf
Senior Vice President, Chief
Financial Officer and Treasurer
(Principal Accounting and
Financial Officer)

EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

10.1 AMENDMENT NO. 1 TO AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF WILLIAMS ENERGY PARTNERS L.P.

10.2 SECOND AMENDMENT TO OMNIBUS AGREEMENT
</Table>