WPZ Williams Partners, L.P. Common Units Representing Limited Partner Interests (delisted)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 28, 2015

Williams Partners L.P.

(Exact name of registrant as specified in its charter)

 

Delaware		1-34831		20-2485124
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)
One Williams Center Tulsa, Oklahoma				74172-0172
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code: (918) 573-2000

NOT APPLICABLE

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02.

Results of Operations and Financial Condition.

On October 28, 2015, Williams Partners L.P. (the “Partnership”) issued a press release announcing its financial results for the quarter ended September 30, 2015. A copy of the press release and accompanying financial highlights and operating statistics and reconciliation schedules are furnished herewith as Exhibit 99.1 and are incorporated herein in their entirety by reference.

The press release and accompanying financial highlights and operating statistics and reconciliation schedules are being furnished pursuant to Item 2.02, Results of Operations and Financial Condition. The information furnished is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

 

Item 9.01.

Financial Statements and Exhibits.

 

(a)

None

 

(b)

None

 

(c)

None

 

(d)

Exhibits.

 

Exhibit Number		Description
Exhibit 99.1		Press release of the Partnership dated October 28, 2015 and accompanying schedules, publicly announcing the Partnership’s financial results for the quarter ended September 30, 2015.

 

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

		WILLIAMS PARTNERS L.P.
		By:		WPZ GP LLC,
				its General Partner
Date: October 28, 2015		By:		/s/ Donald R. Chappel
				Donald R. Chappel
				Chief Financial Officer

 

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INDEX TO EXHIBITS

 

Exhibit Number		Description
Exhibit 99.1		Press release of the Partnership dated October 28, 2015 and accompanying schedules, publicly announcing the Partnership’s financial results for the quarter ended September 30, 2015.

 

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Exhibit 99.1

 

News Release		Williams Partners L.P. (NYSE: WPZ) One Williams Center Tulsa, OK 74172 800-600-3782 www.williams.com

 

 

DATE: Oct. 28, 2015

 

MEDIA CONTACT:		INVESTOR CONTACTS:
Tom Droege 918) 573-4034		John Porter (918) 573-0797		Brett Krieg (918) 573-4614

Williams Partners Reports Third-Quarter 2015 Financial Results

 

•

3Q 2015 Adjusted EBITDA is $1.1 Billion, Up 21% Primarily on Major Fee-Based Projects

 

•

Record Distributable Cash Flow of $754 Million – More than Double 3Q 2014 – Coverage Ratio of 1.04x

 

•

Fee-Based Revenues Up $204 Million or 18% on Contributions from New Major Projects, Access Midstream Growth

TULSA, Okla. – Williams Partners L.P. (NYSE: WPZ) today reported third quarter 2015 adjusted EBITDA of $1.1 billion, a $193 million, or 21 percent, increase from third quarter 2014.

The increase in adjusted EBITDA for third quarter 2015 is due to increases of $143 million from the Atlantic-Gulf segment, $63 million from NGL & Petchem Services, $29 million from Access Midstream and $19 million from the Northeast G&P segment. Partially offsetting these increases was a $63 million decrease in the West due to lower NGL margins.

 

Summary Financial Information		3Q								YTD
Amounts in millions, except coverage ratio amounts. All income amounts attributable to Williams Partners L.P.		2015				2014				2015				2014
(Unaudited)
Williams Partners
Adjusted EBITDA (1)		$	1,100			$	907			$	3,025			$	2,392
DCF attributable to partnership operations (1)		$	754			$	367			$	2,101			$	1,453
Cash distribution coverage ratio (1) (2)			1.04x				.63x				.97x				.84x
Net income (loss) (3)		($	194	)		$	233			$	195			$	806

 

(1)

Adjusted EBITDA, distributable cash flow (DCF) and cash distribution coverage ratio are non-GAAP measures. Financial information for periods prior to July 1, 2014 represents Williams Partners L.P. on a basis that is prior to the merger with Access Midstream Partners, L.P. DCF and cash distribution coverage ratio for the 2014 periods reflect amounts previously reported for Williams Partners L.P. for those periods prior to the merger. Reconciliations to the most relevant measures included in GAAP are attached to this news release.

(2)

Cash distribution coverage ratios for the third quarter and year-to-date 2015 periods exclude the benefit of $209 million of IDR waivers associated with the WPZ merger termination fee. The 2015 cash distribution coverage ratios, including the benefit of the $209 million IDR waiver during third quarter 2015, are 1.47x and 1.07x for the third quarter and year-to-date 2015 periods, respectively.

(3)	Amounts reported for the 2015 periods reflect impairment charges totaling $477 million associated with certain equity-method investments previously recorded at fair value in conjunction with the Access merger.

 

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The increase in adjusted EBITDA in third quarter 2015 as described above by segment was driven by $204 million, or 18 percent, higher fee-based revenues and minimum volume commitments compared with third quarter 2014. Olefins margins increased $58 million reflecting production at the expanded Geismar plant in third quarter 2015 at multi-year low per unit ethylene margins, partially offset by lower margins from our Canadian operations. Additionally, the proportional EBITDA from non-consolidated equity investments increased $52 million for third quarter 2015 versus third quarter 2014, due primarily to Discovery’s Keathley Canyon Connector project in the Atlantic-Gulf operating area.

Partially offsetting these increases were $68 million in lower NGL margins due primarily to NGL prices that remain at a 10-year low, as well as $51 million higher operating and general and administrative expenses versus third quarter 2014 primarily reflecting higher costs associated with our growing businesses.

Year-to-date 2015, Williams Partners reported adjusted EBITDA of $3.025 billion, a $633 million, or 26 percent, increase from the same period last year. The year-to-date increase in adjusted EBITDA was primarily driven by contributions from the Access Midstream merger for periods following July 1, 2014, as well as fee-based revenue growth in other operating areas.

Williams Partners reported unaudited third quarter 2015 net loss attributable to controlling interests of $194 million compared with income of $233 million in third quarter 2014. The unfavorable change was driven by $477 million of impairments in 2015 associated with certain equity-method investments, as well as declines in NGL margins and higher operating, depreciation and interest expenses. The impairment charges primarily relate to our investment in the Delaware basin gas gathering system, which were driven by an increase in the discount rate utilized in our estimation of the fair value of the investment at September 30, 2015. Higher fee-based revenues and increased olefins margins partially offset these unfavorable changes.

Year-to-date net income was $195 million, compared with $806 million year-to-date 2014. The year-to-date decrease in net income was driven primarily by the same factors described above, as well as higher general and administrative costs.

Distributable Cash Flow & Distributions

For third quarter 2015, Williams Partners generated $754 million in distributable cash flow (DCF) attributable to partnership operations, compared with $367 million in DCF attributable to partnership operations in third quarter 2014. The $387 million increase in DCF for the quarter was driven by the Access Midstream acquisition and other increases in adjusted EBITDA, partially offset by higher interest expense. DCF for 2014 reflects pre-merger Williams Partners.

Year-to-date 2015, Williams Partners generated $2.1 billion in DCF attributable to partnership operations, compared with $1.45 billion in DCF attributable to partnership operations for the same period last year. The $648 million increase in DCF for the nine-month period ended Sept. 30 was driven by the Access Midstream acquisition and other increases in adjusted EBITDA, partially offset by higher interest expense.

CEO Perspective

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

“Our strong third quarter results underscore the effectiveness of our strategy to connect the best natural gas supplies to the best markets with fee-based infrastructure, which accounted for more than 90 percent of our gross margin. Williams Partners achieved record distributable cash flow and delivered adjusted EBITDA growth across four of the partnership’s five operating areas.

 

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“In September, we completed Transco’s Virginia Southside Expansion and we’re on track to place into full service the Leidy Southeast Expansion by the end of the year, helping relieve supply bottlenecks in the Northeast and creating more fee-based revenue. Supply development in the Northeast will continue to be hampered until constraints are addressed. Fortunately, Williams Partners and other industry participants are hard at work implementing projects that will solve this problem.

“We recognize the fundamental pressures impacting our direct commodity margins and volume growth on our gathering and processing systems. However, our unique position and backlog of fully contracted, demand-driven projects will drive our continued operating cash flow growth.”

Business Segment Performance

 

Williams Partners		Adjusted EBITDA
Amounts in millions		3Q 2015				3Q 2014				YTD 2015				YTD 2014
Access Midstream (1)		$	351			$	322			$	1,010			$	322
Atlantic-Gulf			414				271				1,138				807
NGL & Petchem Services (2)			85				22				125				426
Northeast G&P			87				68				279				198
West			161				224				473				641
Other			2				—				—				(2	)
Total		$	1,100			$	907			$	3,025			$	2,392

Schedules reconciling adjusted EBITDA to modified EBITDA and net income are attached to this news release.

 

(1)	First and second quarter 2014 represents pre-merger Williams Partners and excludes Access Midstream.

(2)	The first and second quarters of 2014 include $173 million and $138 million, respectively, in assumed business interruption insurance proceeds related to the 2013 incident at the Geismar plant.

Access Midstream Segment

Access Midstream provides gathering, treating, and compression services to producers under long term, fee-based contracts in Pennsylvania, West Virginia, Ohio, Louisiana, Texas, Arkansas, Oklahoma and Kansas. Access Midstream also includes a non-operated 50 percent interest in the Delaware Basin gas gathering system in the Mid-Continent region and a 62 percent interest in Utica East Ohio Midstream LLC, a joint project to develop infrastructure for the gathering, processing and fractionation of natural gas and NGLs in the Utica Shale play in Eastern Ohio. Additionally, Access Midstream operates 100 percent of and owns an approximate average 45 percent interest in 11 natural gas gathering systems in the Marcellus Shale region.

Access Midstream reported adjusted EBITDA of $351 million for third quarter 2015, compared with $322 million of adjusted EBITDA in third quarter 2014. The increase in adjusted EBITDA between years was driven by higher fee-based volumes, minimum volume commitments and the increased ownership interest in the Utica East Ohio Midstream joint venture.

Year-to-date 2015, Access Midstream segment reported adjusted EBITDA of $1.01 billion, compared with $322 million previously reported for the same period last year. Williams Partners’ results for first and second quarter 2014 are on a pre-merger basis and exclude Access Midstream.

Atlantic-Gulf Segment

Atlantic-Gulf includes the Transco interstate gas pipeline and a 41-percent interest in the Constitution interstate gas pipeline development project, which Williams Partners consolidates. The segment also includes the partnership’s significant natural gas gathering and processing and crude production handling and transportation in the Gulf Coast region. These operations include a 51-percent interest in Gulfstar One, a 50-percent interest in Gulfstream and a 60-percent interest in the Discovery pipeline and processing system.

 

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Atlantic-Gulf reported adjusted EBITDA of $414 million for third quarter 2015, compared with $271 million for third quarter 2014. The increase was due primarily to $113 million higher fee-based revenues from both Gulfstar One and Transco expansion projects, as well as $35 million higher proportional adjusted EBITDA primarily from Discovery driven by the Keathley Canyon Connector project, partially offset by lower NGL margins.

Year-to-date 2015, Atlantic-Gulf reported adjusted EBITDA of $1.14 billion, compared with $807 million for the same period last year. The year-to-date results were driven primarily by the same factors that drove the quarterly results.

NGL & Petchem Services Segment

NGL & Petchem Services includes an 88.5 percent interest in an olefins production facility in Geismar, La., along with a refinery grade propylene splitter and pipelines in the Gulf Coast region. This segment also includes midstream operations in Alberta, Canada, including an oil sands offgas processing plant near Fort McMurray, 260 miles of NGL and olefins pipelines and an NGL/olefins fractionation facility and butylene/butane splitter facility at Redwater. This segment also includes the partnership’s energy commodities marketing business, an NGL fractionator and storage facilities near Conway, Kan. and a 50-percent interest in Overland Pass Pipeline.

NGL & Petchem Services reported adjusted EBITDA of $85 million for third quarter 2015, compared with $22 million for third quarter 2014. Geismar operated at expected production levels and contributed approximately $71 million of olefins margins for third quarter 2015, partially offset by $19 million in lower commodity-related margins at the Canadian operations.

Year-to-date 2015, NGL & Petchem Services reported adjusted EBITDA of $125 million, compared with $426 million for the same period last year. Year-to-date 2014 results include approximately $311 million in assumed business interruption insurance proceeds related to the 2013 incident at the Geismar plant. In addition to the absence of the assumed business interruption insurance proceeds, the year-to-date results were also driven by the same factors that drove the quarterly results.

Northeast G&P Segment

Northeast G&P includes the partnership’s midstream gathering and processing business in the Marcellus and Utica shale regions, including Susquehanna Supply Hub and Ohio Valley Midstream, as well as its 69-percent equity investment in Laurel Mountain Midstream, and its 58.4-percent equity investment in Caiman Energy II. Caiman Energy II owns a 50 percent interest in Blue Racer Midstream.

Northeast G&P reported adjusted EBITDA of $87 million for third quarter 2015, compared with $68 million for third quarter 2014. The improved results are due primarily to a $25 million increase in fee-based revenues driven primarily by higher volumes and incremental new services at Ohio Valley Midstream, as well as $11 million higher proportional EBITDA from equity investments. These gains were partially offset by $15 million in higher operating expenses associated with growth and operational repairs in the Northeast.

Year-to-date 2015, Northeast G&P reported adjusted EBITDA of $279 million, compared with $198 million for the same period last year. The year-to-date results were driven primarily by the same factors that drove the quarterly results.

West Segment

West includes the partnership’s Northwest Pipeline interstate gas pipeline system, as well as gathering, processing and treating operations in Wyoming, the Piceance Basin and the Four Corners area.

 

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West reported adjusted EBITDA of $161 million for third quarter 2015, compared with $224 million for third quarter 2014. Lower adjusted EBITDA for the quarter was due primarily to $52 million lower NGL margins from lower NGL prices that remain at 10-year lows.

Year-to-date 2015, West reported adjusted EBITDA of $473 million, compared with $641 million for the same period last year. Lower adjusted EBITDA for the year-to-date period was due primarily to nearly $123 million lower NGL margins and $37 million higher operating and maintenance expenses driven by the addition of the Niobrara operations from the Access Midstream merger and various increases in other operating expenses.

Other

Williams Partners recently announced a regular quarterly cash distribution of $0.85 per unit for its common unitholders. As announced on Sept. 28 in connection with the proposed business combination transaction between Williams and Energy Transfer Equity, L.P., Williams and Williams Partners withdrew previous financial guidance and adopted a policy of no longer providing financial guidance.

Third-Quarter Materials to be Posted Shortly, Live Webcast Scheduled for Tomorrow

Williams Partners’ third-quarter 2015 financial results will be posted shortly at www.williams.com. The information will include the data book and analyst package.

Williams Partners and Williams will jointly host a conference call and live webcast on Thursday, Oct. 29, at 9 a.m. EDT. A limited number of phone lines will be available at (800) 505-9568. International callers should dial (416) 505-9568. A link to the webcast, as well as replays of the webcast in both streaming and downloadable podcast formats, will be available following the event at www.williams.com.

Form 10-Q

The partnership plans to file its third-quarter 2015 Form 10-Q with the Securities and Exchange Commission this week. Once filed, the document will be available on both the SEC and Williams Partners websites.

Definitions of Non-GAAP Financial Measures

This news release may include certain financial measures – adjusted EBITDA, distributable cash flow and cash distribution coverage ratio – that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission.

Our segment performance measure, modified EBITDA, is defined as net income (loss) before income tax expense, net interest expense, equity earnings from equity-method investments, other net investing income, impairments of equity investments, depreciation and amortization expense, and accretion expense associated with asset retirement obligations for nonregulated operations. We also add our proportional ownership share (based on ownership interest) of modified EBITDA of equity investments.

Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations and may include assumed business interruption insurance related to the Geismar plant. Management believes these measures provide investors meaningful insight into results from ongoing operations.

We define distributable cash flow as adjusted EBITDA less maintenance capital expenditures, cash portion of interest expense, income attributable to noncontrolling interests and cash income taxes, plus WPZ restricted stock unit non-cash compensation expense and certain other adjustments that management believes affects the comparability of results. Adjustments for maintenance capital expenditures and cash portion of interest expense include our proportionate share of these items of our equity-method investments.

 

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We also calculate the ratio of distributable cash flow to the total cash distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We have also provided this ratio calculated using the most directly comparable GAAP measure, net income.

This news release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the Partnership’s assets and the cash that the business is generating.

Neither adjusted EBITDA nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

About Williams Partners

Williams Partners (NYSE: WPZ) is an industry-leading, large-cap natural gas infrastructure master limited partnership with a strong growth outlook and major positions in key U.S. supply basins and also in Canada. Williams Partners has operations across the natural gas value chain from gathering, processing and interstate transportation of natural gas and natural gas liquids to petchem production of ethylene, propylene and other olefins. Williams Partners owns and operates more than 33,000 miles of pipelines system wide – including the nation’s largest volume and fastest growing pipeline – providing natural gas for clean-power generation, heating and industrial use. Williams Partners’ operations touch approximately 30 percent of U.S. natural gas. Tulsa, Okla.-based Williams (NYSE: WMB), a premier provider of large-scale North American natural gas infrastructure, owns 60 percent of Williams Partners, including all of the 2 percent general-partner interest. www.williams.com

Forward-Looking Statements

The reports, filings, and other public announcements of Williams Partners L.P. (WPZ) may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. 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 various forms of words such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “assumes,” “guidance,” “outlook,” “in service date” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:

 

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The status, expected timing and expected outcome of the proposed ETC Merger;

 

•

Events which may occur subsequent to the proposed ETC Merger including events which directly impact our business;

 

•

Expected levels of cash distributions with respect to general partner interests, incentive distribution rights and limited partner interests;

 

•

Our and our affiliates’ future credit ratings;

 

•

Amounts and nature of future capital expenditures;

 

•

Expansion and growth of our business and operations;

 

•

Financial condition and liquidity;

 

•

Business strategy;

 

•

Cash flow from operations or results of operations;

 

•

Seasonality of certain business components;

 

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Natural gas, natural gas liquids, and olefins prices, supply, and demand; and

 

•

Demand for our services.

 

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Forward-looking statements are based on numerous assumptions, uncertainties and risks that could cause future events or results to be materially different from those stated or implied in this document. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:

 

•

The timing and likelihood of completion of the proposed ETC Merger, including the satisfaction of conditions to the completion of the proposed ETC Merger;

 

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Energy Transfer’s plans for us, as well as the other master limited partnerships it currently controls, following the completion of the proposed ETC Merger;

 

•

Disruption from the proposed ETC Merger making it more difficult to maintain business and operational relationships;

 

•

Whether we have sufficient cash from operations to enable us to pay current and expected levels of cash distributions, if any, following the establishment of cash reserves and payment of fees and expenses, including payments to our general partner;

 

•

Availability of supplies, market demand and volatility of prices;

 

•

Inflation, interest rates, fluctuation in foreign exchange rates and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on customers and suppliers);

 

•

The strength and financial resources of our competitors and the effects of competition;

 

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Whether we are able to successfully identify, evaluate and execute investment opportunities;

 

•

Our ability to acquire new businesses and assets and successfully integrate those operations and assets into our existing businesses as well as successfully expand our facilities;

 

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Development of alternative energy sources;

 

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The impact of operational and developmental hazards and unforeseen interruptions;

 

•

Costs of, changes in, or the results of laws, government regulations (including safety and environmental regulations), environmental liabilities, litigation, and rate proceedings;

 

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Williams’ costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;

 

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Our allocated costs for defined benefit pension plans and other postretirement benefit plans sponsored by our affiliates;

 

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Changes in maintenance and construction costs;

 

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Changes in the current geopolitical situation;

 

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Our exposure to the credit risk of our customers and counterparties;

 

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Risks related to financing, including restrictions stemming from debt agreements, future changes in credit ratings as determined by nationally-recognized credit rating agencies and the availability and cost of capital;

 

•

The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate;

 

•

Risks associated with weather and natural phenomena, including climate conditions;

 

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

 

•

Additional risks described in our filings with the Securities and Exchange Commission (SEC).

Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.

In addition to causing our actual results to differ, the factors listed above and referred to below may cause our intentions to change from those statements of intention set forth in this document. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise.

Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. For a detailed discussion of those factors, see Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K filed with the SEC on February 25, 2015 and in Part II, Item 1A. Risk Factors in our Quarterly Report on Form 10-Q available from our office or from our website at www.williams.com.

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Williams Partners L.P.

Reconciliation of Non-GAAP Measures

(UNAUDITED)

 

		2014																				2015
(Dollars in millions, except coverage ratios)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Williams Partners L.P.
Reconciliation of GAAP “Net Income” to Non-GAAP “Modified EBITDA”, “Adjusted EBITDA”, and “Distributable cash flow”
Net income		$	352			$	223			$	247			$	462			$	1,284			$	112			$	332			$	(167	)		$	277
Provision (benefit) for income taxes			8				5				10				6				29				3				—				1				4
Interest expense			106				126				154				176				562				192				203				205				600
Equity (earnings) losses			(23	)			(32	)			(85	)			(88	)			(228	)			(51	)			(93	)			(92	)			(236	)
Impairment of equity-method investments			—				—				—				—				—				—				—				461				461
Other investing (income) loss			—				(1	)			—				(1	)			(2	)			(1	)			—				—				(1	)
Proportional Modified EBITDA of equity-method investments			54				62				150				165				431				136				183				185				504
Depreciation and amortization expenses			208				207				364				372				1,151				419				419				423				1,261
Accretion for asset retirement obligations associated with nonregulated operations			3				6				3				5				17				7				9				5				21
Modified EBITDA			708				596				843				1,097				3,244				817				1,053				1,021				2,891
Adjustments
Estimated minimum volume commitments			—				—				47				(114	)			(67	)			55				55				65				175
Acquisition-related expenses			—				2				13				1				16				—				—				—				—
Merger and transition related expenses			—				—				11				30				41				32				14				2				48
Share of impairment at equity-method investment			—				—				—				—				—				8				1				17				26
Geismar Incident adjustment for insurance and timing			54				96				—				(71	)			79				—				(126	)			—				(126	)
Loss related to Geismar Incident			—				—				5				5				10				1				1				—				2
Impairment of certain assets			—				17				—				35				52				3				24				2				29
Contingency loss (gain), net of legal costs			—				—				—				(143	)			(143	)			—				—				—				—
Net gain related to partial acreage dedication release			—				—				(12	)			—				(12	)			—				—				—				—
Loss related to compressor station fire			6				—				—				—				6				—				—				—				—
Loss (recovery) related to Opal incident			—				6				—				2				8				1				—				(8	)			(7	)
Loss on sale of equipment			—				—				—				7				7				—				—				—				—
Gain on extinguishment of debt			—				—				—				—				—				—				(14	)			—				(14	)
Proposed WMB/WPZ merger expenses			—				—				—				—				—				—				—				1				1
Total EBITDA adjustments			60				121				64				(248	)			(3	)			100				(45	)			79				134
Adjusted EBITDA		$	768			$	717			$	907			$	849			$	3,241				917				1,008				1,100				3,025
Maintenance capital expenditures (1)																							(54	)			(80	)			(114	)			(248	)
Interest expense (cash portion) (2)																							(204	)			(207	)			(219	)			(630	)
Cash taxes																							(1	)			—				—				(1	)
Income attributable to noncontrolling interests																							(23	)			(32	)			(27	)			(82	)
WPZ restricted stock unit non-cash compensation																							7				6				7				20
Plymouth incident adjustment																							4				6				7				17
Distributable cash flow attributable to Partnership Operations																							646				701				754				2,101
Total cash distributed (3)																						$	725			$	723			$	723			$	2,171
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash distributed																							0.89				0.97				1.04				0.97
Net income divided by Total cash distributed																							0.15				0.46				(0.23	)			0.13

 

Notes:		(1)		Includes proportionate share of maintenance capital expenditures of equity investments.
		(2)		Includes proportionate share of interest expense of equity investments.
		(3)		Cash distributions for the third quarter and year-to-date periods have been increased by $209 million in order to exclude the impact of the IDR waiver associated with the WPZ merger termination fee from the determination of coverage ratios.

 

8

---

Williams Partners L.P.

Reconciliation of Non-GAAP “Modified EBITDA” to Non-GAAP “Adjusted EBITDA”

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Modified EBITDA:
Access Midstream		$	—			$	(2	)		$	254			$	390			$	642			$	228			$	273			$	268			$	769
Northeast G&P			48				59				80				208				395				90				70				84				244
Atlantic-Gulf			266				270				271				258				1,065				335				389				414				1,138
West			212				199				224				188				823				161				150				169				480
NGL & Petchem Services			182				72				17				53				324				6				158				85				249
Other			—				(2	)			(3	)			—				(5	)			(3	)			13				1				11
Total Modified EBITDA		$	708			$	596			$	843			$	1,097			$	3,244			$	817			$	1,053			$	1,021			$	2,891
Adjustments:
Access Midstream
ACMP Acquisition-related expenses		$	—			$	2			$	13			$	1			$	16			$	—				—				—				—
ACMP Merger and transition costs			—				—				8				29				37				30				14				2				46
Loss on sale of equipment			—				—				—				7				7				—				—				—				—
Impairment of certain assets			—				—				—				12				12				1				3				—				4
Estimated minimum volume commitments			—				—				47				(114	)			(67	)			55				55				65				175
Share of impairment at equity-method investment			—				—				—				—				—				—				—				16				16
Total Access Midstream adjustments			—				2				68				(65	)			5				86				72				83				241
Northeast G&P
Share of impairment at equity-method investment			—				—				—				—				—				8				1				1				10
Contingency gain, net of legal costs			—				—				—				(143	)			(143	)			—				—				—				—
Loss related to compressor station fire			6				—				—				—				6				—				—				—				—
Net gain related to partial acreage dedication release			—				—				(12	)			—				(12	)			—				—				—				—
Impairment of certain assets			—				17				—				13				30				2				21				2				25
Total Northeast G&P adjustments			6				17				(12	)			(130	)			(119	)			10				22				3				35
Atlantic-Gulf
Impairment of certain assets			—				—				—				10				10				—				—				—				—
Total Atlantic-Gulf adjustments			—				—				—				10				10				—				—				—				—
West
Loss (recovery) related to Opal incident			—				6				—				2				8				1				—				(8	)			(7	)
Total West adjustments			—				6				—				2				8				1				—				(8	)			(7	)
NGL & Petchem Services
Loss related to Geismar Incident			—				—				5				5				10				1				1				—				2
Geismar Incident adjustment for insurance and timing			54				96				—				(71	)			79				—				(126	)			—				(126	)
Total NGL & Petchem Services adjustments			54				96				5				(66	)			89				1				(125	)			—				(124	)
Other
ACMP Merger-related expenses			—				—				3				1				4				2				—				—				2
Proposed WMB/WPZ Merger expenses			—				—				—				—				—				—				—				1				1
Gain on extinguishment of debt			—				—				—				—				—				—				(14	)			—				(14	)
Total Other adjustments			—				—				3				1				4				2				(14	)			1				(11	)
Total Adjustments		$	60			$	121			$	64			$	(248	)		$	(3	)		$	100			$	(45	)		$	79			$	134
Adjusted EBITDA:
Access Midstream		$	—			$	—			$	322			$	325			$	647			$	314			$	345			$	351			$	1,010
Northeast G&P			54				76				68				78				276				100				92				87				279
Atlantic-Gulf			266				270				271				268				1,075				335				389				414				1,138
West			212				205				224				190				831				162				150				161				473
NGL & Petchem Services			236				168				22				(13	)			413				7				33				85				125
Other			—				(2	)			—				1				(1	)			(1	)			(1	)			2				—
Total Adjusted EBITDA		$	768			$	717			$	907			$	849			$	3,241			$	917			$	1,008			$	1,100			$	3,025

 

9

---

 

Financial Highlights and Operating Statistics

(UNAUDITED)

Final

September 30, 2015

---

Williams Partners L.P.

Reconciliation of Non-GAAP Measures

(UNAUDITED)

 

		2014																				2015
(Dollars in millions, except coverage ratios)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Williams Partners L.P.
Reconciliation of GAAP “Net Income” to Non-GAAP “Modified EBITDA”, “Adjusted EBITDA”, and “Distributable cash flow”
Net income		$	352			$	223			$	247			$	462			$	1,284			$	112			$	332			$	(167	)		$	277
Provision (benefit) for income taxes			8				5				10				6				29				3				—				1				4
Interest expense			106				126				154				176				562				192				203				205				600
Equity (earnings) losses			(23	)			(32	)			(85	)			(88	)			(228	)			(51	)			(93	)			(92	)			(236	)
Impairment of equity-method investments			—				—				—				—				—				—				—				461				461
Other investing (income) loss			—				(1	)			—				(1	)			(2	)			(1	)			—				—				(1	)
Proportional Modified EBITDA of equity-method investments			54				62				150				165				431				136				183				185				504
Depreciation and amortization expenses			208				207				364				372				1,151				419				419				423				1,261
Accretion for asset retirement obligations associated with nonregulated operations			3				6				3				5				17				7				9				5				21
Modified EBITDA			708				596				843				1,097				3,244				817				1,053				1,021				2,891
Adjustments
Estimated minimum volume commitments			—				—				47				(114	)			(67	)			55				55				65				175
Acquisition-related expenses			—				2				13				1				16				—				—				—				—
Merger and transition related expenses			—				—				11				30				41				32				14				2				48
Share of impairment at equity-method investment			—				—				—				—				—				8				1				17				26
Geismar Incident adjustment for insurance and timing			54				96				—				(71	)			79				—				(126	)			—				(126	)
Loss related to Geismar Incident			—				—				5				5				10				1				1				—				2
Impairment of certain assets			—				17				—				35				52				3				24				2				29
Contingency loss (gain), net of legal costs			—				—				—				(143	)			(143	)			—				—				—				—
Net gain related to partial acreage dedication release			—				—				(12	)			—				(12	)			—				—				—				—
Loss related to compressor station fire			6				—				—				—				6				—				—				—				—
Loss (recovery) related to Opal incident			—				6				—				2				8				1				—				(8	)			(7	)
Loss on sale of equipment			—				—				—				7				7				—				—				—				—
Gain on extinguishment of debt			—				—				—				—				—				—				(14	)			—				(14	)
Proposed WMB/WPZ merger expenses			—				—				—				—				—				—				—				1				1
Total EBITDA adjustments			60				121				64				(248	)			(3	)			100				(45	)			79				134
Adjusted EBITDA		$	768			$	717			$	907			$	849			$	3,241				917				1,008				1,100				3,025
Maintenance capital expenditures (1)																							(54	)			(80	)			(114	)			(248	)
Interest expense (cash portion) (2)																							(204	)			(207	)			(219	)			(630	)
Cash taxes																							(1	)			—				—				(1	)
Income attributable to noncontrolling interests																							(23	)			(32	)			(27	)			(82	)
WPZ restricted stock unit non-cash compensation																							7				6				7				20
Plymouth incident adjustment																							4				6				7				17
Distributable cash flow attributable to Partnership Operations																							646				701				754				2,101
Total cash distributed (3)																						$	725			$	723			$	723			$	2,171
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash distributed																							0.89				0.97				1.04				0.97
Net income divided by Total cash distributed																							0.15				0.46				(0.23	)			0.13

 

Notes:		(1)		Includes proportionate share of maintenance capital expenditures of equity investments.
		(2)		Includes proportionate share of interest expense of equity investments.
		(3)		Cash distributions for the third quarter and year-to-date periods have been increased by $209 million in order to exclude the impact of the IDR waiver associated with the WPZ merger termination fee from the determination of coverage ratios.

---

Williams Partners L.P.

Reconciliation of Non-GAAP “Modified EBITDA” to Non-GAAP “Adjusted EBITDA”

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Modified EBITDA:
Access Midstream		$	—			$	(2	)		$	254			$	390			$	642			$	228			$	273			$	268			$	769
Northeast G&P			48				59				80				208				395				90				70				84				244
Atlantic-Gulf			266				270				271				258				1,065				335				389				414				1,138
West			212				199				224				188				823				161				150				169				480
NGL & Petchem Services			182				72				17				53				324				6				158				85				249
Other			—				(2	)			(3	)			—				(5	)			(3	)			13				1				11
Total Modified EBITDA		$	708			$	596			$	843			$	1,097			$	3,244			$	817			$	1,053			$	1,021			$	2,891
Adjustments:
Access Midstream
ACMP Acquisition-related expenses		$	—			$	2			$	13			$	1			$	16			$	—				—				—				—
ACMP Merger and transition costs			—				—				8				29				37				30				14				2				46
Loss on sale of equipment			—				—				—				7				7				—				—				—				—
Impairment of certain assets			—				—				—				12				12				1				3				—				4
Estimated minimum volume commitments			—				—				47				(114	)			(67	)			55				55				65				175
Share of impairment at equity-method investment			—				—				—				—				—				—				—				16				16
Total Access Midstream adjustments			—				2				68				(65	)			5				86				72				83				241
Northeast G&P
Share of impairment at equity-method investment			—				—				—				—				—				8				1				1				10
Contingency gain, net of legal costs			—				—				—				(143	)			(143	)			—				—				—				—
Loss related to compressor station fire			6				—				—				—				6				—				—				—				—
Net gain related to partial acreage dedication release			—				—				(12	)			—				(12	)			—				—				—				—
Impairment of certain assets			—				17				—				13				30				2				21				2				25
Total Northeast G&P adjustments			6				17				(12	)			(130	)			(119	)			10				22				3				35
Atlantic-Gulf
Impairment of certain assets			—				—				—				10				10				—				—				—				—
Total Atlantic-Gulf adjustments			—				—				—				10				10				—				—				—				—
West
Loss (recovery) related to Opal incident			—				6				—				2				8				1				—				(8	)			(7	)
Total West adjustments			—				6				—				2				8				1				—				(8	)			(7	)
NGL & Petchem Services
Loss related to Geismar Incident			—				—				5				5				10				1				1				—				2
Geismar Incident adjustment for insurance and timing			54				96				—				(71	)			79				—				(126	)			—				(126	)
Total NGL & Petchem Services adjustments			54				96				5				(66	)			89				1				(125	)			—				(124	)
Other
ACMP Merger-related expenses			—				—				3				1				4				2				—				—				2
Proposed WMB/WPZ Merger expenses			—				—				—				—				—				—				—				1				1
Gain on extinguishment of debt			—				—				—				—				—				—				(14	)			—				(14	)
Total Other adjustments			—				—				3				1				4				2				(14	)			1				(11	)
Total Adjustments		$	60			$	121			$	64			$	(248	)		$	(3	)		$	100			$	(45	)		$	79			$	134
Adjusted EBITDA:
Access Midstream		$	—			$	—			$	322			$	325			$	647			$	314			$	345			$	351			$	1,010
Northeast G&P			54				76				68				78				276				100				92				87				279
Atlantic-Gulf			266				270				271				268				1,075				335				389				414				1,138
West			212				205				224				190				831				162				150				161				473
NGL & Petchem Services			236				168				22				(13	)			413				7				33				85				125
Other			—				(2	)			—				1				(1	)			(1	)			(1	)			2				—
Total Adjusted EBITDA		$	768			$	717			$	907			$	849			$	3,241			$	917			$	1,008			$	1,100			$	3,025

---

Williams Partners L.P.

Consolidated Statement of Income (Loss)

(UNAUDITED)

 

		2014																				2015
(Dollars in millions, except per-unit amounts)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Revenues:
Service revenues		$	763			$	763			$	1,066			$	1,296			$	3,888			$	1,192			$	1,231			$	1,232			$	3,655
Product sales			930				853				942				796				3,521				519				599				560				1,678
Total revenues			1,693				1,616				2,008				2,092				7,409				1,711				1,830				1,792				5,333
Costs and expenses:
Product costs			769				724				807				716				3,016				463				494				426				1,383
Operating and maintenance expenses			248				251				354				424				1,277				380				431				394				1,205
Depreciation and amortization expenses			208				207				364				372				1,151				419				419				423				1,261
Selling, general, and administrative expenses			130				134				168				201				633				193				164				156				513
Net insurance recoveries—Geismar Incident			(119	)			(42	)			—				(71	)			(232	)			—				(126	)			—				(126	)
Other (income) expense—net			17				27				3				(92	)			(45	)			17				38				7				62
Total costs and expenses			1,253				1,301				1,696				1,550				5,800				1,472				1,420				1,406				4,298
Operating income			440				315				312				542				1,609				239				410				386				1,035
Equity earnings (losses)			23				32				85				88				228				51				93				92				236
Impairment of equity—method investments			—				—				—				—				—				—				—				(461	)			(461	)
Other investing income (loss)—net			—				1				—				1				2				1				—				—				1
Interest incurred			(131	)			(151	)			(200	)			(201	)			(683	)			(209	)			(215	)			(216	)			(640	)
Interest capitalized			25				25				46				25				121				17				12				11				40
Other income (expense)—net			3				6				14				13				36				16				32				22				70
Income (loss) before income taxes			360				228				257				468				1,313				115				332				(166	)			281
Provision (benefit) for income taxes			8				5				10				6				29				3				—				1				4
Net income (loss)			352				223				247				462				1,284				112				332				(167	)			277
Less: Net income attributable to noncontrolling interests			—				2				14				80				96				23				32				27				82
Net income (loss) attributable to controlling interests		$	352			$	221			$	233			$	382			$	1,188			$	89			$	300			$	(194	)		$	195
Allocation of net income (loss) for calculation of earnings per common unit:
Net income (loss) attributable to controlling interests		$	352			$	221			$	233			$	382			$	1,188			$	89			$	300			$	(194	)		$	195
Allocation of net income (loss) to general partner			180				156				187				233				756				195				216				1				412
Allocation of net income (loss) to Class B units (1)			—				—				—				—				—				(2	)			1				(5	)			(6	)
Allocation of net income (loss) to Class D units			14				18				17				24				73				68				—				—				68
Allocation of net income (loss) to common units		$	158			$	47			$	29			$	125			$	359			$	(172	)		$	83			$	(190	)		$	(279	)
Diluted earnings (loss) per common unit:
Net income (loss) per common unit (1)		$	.44			$	.13			$	.08			$	.35			$	.99			$	(.34	)		$	.14			$	(0.32	)		$	(.50	)
Weighted average number of common units outstanding (thousands)			361,620				361,620				362,064				362,556				361,968				507,001			$	587,088			$	586,722			$	560,432
Cash distributions per common unit		$	.9045			$	.9165			$	.9285			$	.8500			$	3.5995			$	.8500			$	.8500			$	.8500			$	2.5500

 

(1)	The sum for the quarters may not equal the total for the year due to timing of unit issuances.

---

Williams Partners L.P.

Access Midstream

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Revenues:
Service revenues:
Nonregulated gathering & processing fee-based revenue		$	—			$	—			$	292			$	473			$	765			$	296			$	311			$	306			$	913
Other fee revenues			—				—				—				—				—				6				28				17				51
			—				—				292				473				765				302				339				323				964
Intrasegment eliminations			—				—				—				—				—				(3	)			(3	)			(3	)			(9	)
Total revenues			—				—				292				473				765				299				336				320				955
Segment costs and expenses:
Other segment costs and expenses			—				2				122				177				301				154				158				129				441
Intrasegment eliminations			—				—				—				—				—				(3	)			(3	)			(3	)			(9	)
Total segment costs and expenses			—				2				122				177				301				151				155				126				432
Proportional Modified EBITDA of equity-method investments			—				—				84				94				178				80				92				74				246
Modified EBITDA			—				(2	)			254				390				642				228				273				268				769
Adjustments			—				2				68				(65	)			5				86				72				83				241
Adjusted EBITDA		$	—			$	—			$	322			$	325			$	647			$	314			$	345			$	351			$	1,010
Distributions received		$	31			$	33			$	78			$	83			$	225			$	—			$	—			$	—			$	—
Operating statistics
Throughput, bcf per day (1)
Barnett shale											.876				.853				.865				.812				.804				.788				.801
Eagle Ford shale											.348				.376				.362				.388				.377				.418				.395
Haynesville shale											.714				.802				.758				.971				1.085				1.000				1.019
Marcellus shale											1.193				1.272				1.233				1.232				1.273				1.239				1.248
Utica shale											.418				.484				.451				.513				.606				.459				.526
Mid-Continent											.554				.537				.545				.506				.515				.519				.520
Total throughput											4.103				4.324				4.214				4.422				4.660				4.423				4.509

 

(1)	Throughput in all regions represents the net throughput allocated to the Partnership’s interest.

---

Williams Partners L.P.

Northeast G&P

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Revenues:
Service revenues:
Nonregulated gathering and processing fee-based revenue		$	93			$	95			$	103			$	117			$	408			$	131			$	119			$	120			$	370
Other fee revenues			6				12				11				15				44				11				21				19				51
Product sales:
NGL sales from gas processing			2				2				2				3				9				2				3				3				8
Marketing sales			58				35				66				62				221				36				32				24				92
Other sales			—				—				—				—				—				—				—				—				—
			159				144				182				197				682				180				175				166				521
Intrasegment eliminations			—				—				—				(1	)			(1	)			—				—				—				—
Total revenues			159				144				182				196				681				180				175				166				521
Segment costs and expenses:
NGL cost of goods sold			1				—				—				(1	)			—				1				1				—				2
Marketing cost of goods sold			57				37				65				62				221				36				32				25				93
Other segment costs and expenses			62				67				48				(59	)			118				60				87				78				225
Intrasegment eliminations			—				—				—				(1	)			(1	)			—				—				—				—
Total segment costs and expenses			120				104				113				1				338				97				120				103				320
Proportional Modified EBITDA of equity-method investments			9				19				11				13				52				7				15				21				43
Modified EBITDA			48				59				80				208				395				90				70				84				244
Adjustments			6				17				(12	)			(130	)			(119	)			10				22				3				35
Adjusted EBITDA		$	54			$	76			$	68			$	78			$	276			$	100			$	92			$	87			$	279
Operating statistics
Gathering and Processing*
Gathering volumes (Tbtu)			179				189				193				227				788				236				206				210				652
Plant inlet natural gas volumes (Tbtu)			29				27				30				32				118				34				42				43				119
Ethane equity sales (million gallons)			—				—				—				3				3				4				11				16				31
Non-ethane equity sales (million gallons)			2				1				3				2				8				2				3				4				9
NGL equity sales (million gallons)			2				1				3				5				11				6				14				20				40
Ethane production (million gallons)			1				1				1				30				33				4				43				52				99
Non-ethane production (million gallons)			38				37				42				40				157				45				56				61				162
NGL production (million gallons)			39				38				43				70				190				49				99				113				261
Laurel Mountain Midstream LLC (equity investment)—100%
Gathering volumes (Tbtu)			34				36				38				40				148				40				40				51				131

 

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

---

Williams Partners L.P.

Atlantic-Gulf

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Revenues:
Service revenues:
Nonregulated gathering & processing fee-based revenue		$	35			$	41			$	40			$	58			$	174			$	95			$	106			$	102			$	303
Regulated transportation revenue			288				274				277				291				1,130				308				312				328				948
Other fee revenues			30				28				28				26				112				29				29				29				87
Product sales:
NGL sales from gas processing			20				25				19				14				78				11				7				11				29
Marketing sales			171				162				171				139				643				87				80				63				230
Other sales			1				1				2				(1	)			3				—				1				—				1
Tracked revenues			53				40				52				62				207				49				56				63				168
			598				571				589				589				2,347				579				591				596				1,766
Intrasegment eliminations			2				2				1				2				7				—				—				(1	)			(1	)
Total revenues			600				573				590				591				2,354				579				591				595				1,765
Segment costs and expenses:
NGL cost of goods sold			6				5				5				5				21				4				2				3				9
Marketing cost of goods sold			171				162				171				140				644				87				80				63				230
Other segment costs and expenses			137				128				133				164				562				142				131				131				404
Tracked costs			53				40				52				62				207				49				56				63				168
Intrasegment eliminations			2				2				1				1				6				—				—				(1	)			(1	)
Total segment costs and expenses			369				337				362				372				1,440				282				269				259				810
Proportional Modified EBITDA of equity-method investments			35				34				43				39				151				38				67				78				183
Modifed EBITDA			266				270				271				258				1,065				335				389				414				1,138
Adjustments			—				—				—				10				10				—				—				—				—
Adjusted EBITDA		$	266			$	270			$	271			$	268			$	1,075			$	335			$	389			$	414			$	1,138
Operating statistics
Gathering and Processing*
Gathering volumes (Tbtu)			28				31				30				27				116				34				38				37				109
Plant inlet natural gas volumes (Tbtu)			60				72				73				73				278				72				64				72				208
Ethane equity sales (million gallons)			2				6				8				2				18				11				2				7				20
Non-ethane equity sales (million gallons)			12				18				13				13				56				15				12				17				44
NGL equity sales (million gallons)			14				24				21				15				74				26				14				24				64
Ethane margin ($/gallon)		$	.46			$	.23			$	.14			$	(.03	)		$	.18			$	.04			$	(.07	)		$	.04			$	.03
Non-ethane margin ($/gallon)		$	1.10			$	1.04			$	1.00			$	.69			$	.96			$	.43			$	.49			$	.42			$	.44
NGL margin ($/gallon)		$	1.02			$	.82			$	.68			$	.59			$	.77			$	.26			$	.41			$	.32			$	.31
Ethane production (million gallons)			45				57				60				59				221				38				33				36				107
Non-ethane production (million gallons)			71				87				92				93				343				94				87				93				274
NGL production (million gallons)			116				144				152				152				564				132				120				129				381
Discovery Producer Services LLC (equity investment)—100%
Gathering volumes (Tbtu)			21				26				32				33				112				35				61				63				159
NGL equity sales (million gallons)			10				10				18				15				53				17				22				21				60
NGL production (million gallons)			47				54				65				61				227				62				79				81				222
Transcontinental Gas Pipe Line
Throughput (Tbtu)			949.2				796.8				821.3				887.3				3,454.6				1,005.1				784.9				803.6				2,593.6
Avg. daily transportation volumes (Tbtu)			10.5				8.8				8.9				9.6				9.5				11.2				8.6				8.7				9.5
Avg. daily firm reserved capacity (Tbtu)			9.6				9.4				9.5				9.9				9.6				10.5				11.0				11.5				11.0

 

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

---

Williams Partners L.P.

West

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Revenues:
Service revenues:
Nonregulated gathering & processing fee-based revenue		$	132			$	141			$	144			$	143			$	560			$	138			$	138			$	138			$	414
Regulated transportation revenue			116				112				113				117				458				116				113				115				344
Other fee revenues			8				8				8				8				32				8				7				10				25
Product sales:
NGL sales from gas processing			103				95				116				88				402				48				49				43				140
Marketing sales			30				28				29				20				107				10				15				15				40
Other sales			12				9				10				6				37				6				4				4				14
Tracked revenues			—				1				—				—				1				—				—				—				—
			401				394				420				382				1,597				326				326				325				977
Intrasegment eliminations			—				(1	)			—				—				(1	)			—				—				—				—
Total revenues			401				393				420				382				1,596				326				326				325				977
Segment costs and expenses:
NGL cost of goods sold			38				35				41				33				147				23				20				20				63
Marketing cost of goods sold			30				27				29				19				105				10				15				15				40
Other cost of goods sold			4				6				4				4				18				3				2				3				8
Other segment costs and expenses			117				126				122				138				503				129				139				118				386
Tracked costs			—				1				—				—				1				—				—				—				—
Intrasegment eliminations			—				(1	)			—				—				(1	)			—				—				—				—
Total segment costs and expenses			189				194				196				194				773				165				176				156				497
Proportional Modified EBITDA of equity-method investments			—				—				—				—				—				—				—				—				—
Modifed EBITDA			212				199				224				188				823				161				150				169				480
Adjustments			—				6				—				2				8				1				—				(8	)			(7	)
Adjusted EBITDA		$	212			$	205			$	224			$	190			$	831			$	162			$	150			$	161			$	473
Operating statistics
Gathering and Processing
Gathering volumes (Tbtu)			229				230				245				242				946				232				231				233				696
Plant inlet natural gas volumes (Tbtu)			249				246				267				261				1,023				258				258				252				768
Ethane equity sales (million gallons)			4				5				7				4				20				2				4				4				10
Non-ethane equity sales (million gallons)			69				71				90				80				310				74				76				75				225
NGL equity sales (million gallons)			73				76				97				84				330				76				80				79				235
Ethane margin ($/gallon)			.12				.22				.21				.17				.19				.39				.14				.28				.24
Non-ethane margin ($/gallon)			.94				.84				.81				.66				.81				.34				.37				.29				.33
NGL margin ($/gallon)			.89				.80				.77				.64				.77				.34				.35				.29				.33
Ethane production (million gallons)			60				86				64				40				250				33				40				37				110
Non-ethane production (million gallons)			233				232				255				245				965				239				248				255				742
NGL production (million gallons)			293				318				319				285				1,215				272				288				292				852
Northwest Pipeline LLC
Throughput (Tbtu)			192.4				141.3				156.7				196.6				687.0				202.7				183.0				177.9				563.6
Avg. daily transportation volumes (Tbtu)			2.1				1.6				1.7				2.1				1.9				2.3				2.0				1.9				2.1
Avg. daily firm reserved capacity (Tbtu)			3.0				3.0				3.0				3.0				3.0				3.0				3.0				3.0				3.0

---

Williams Partners L.P.

NGL & Petchem Services

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Revenues:
Service revenue:
Nonregulated gathering & processing fee-based revenue		$	7			$	7			$	7			$	7			$	28			$	7			$	10			$	11			$	28
Other fee-based revenues			33				33				33				35				134				41				42				47				130
Product sales:
NGL sales from gas processing			54				32				31				41				158				28				18				19				65
Olefin sales			79				96				73				93				341				71				162				174				407
Marketing sales			698				680				748				589				2,715				378				372				337				1,087
Other sales			11				11				8				5				35				4				4				1				9
			882				859				900				770				3,411				529				608				589				1,726
Intrasegment eliminations			(77	)			(76	)			(72	)			(74	)			(299	)			(54	)			(61	)			(60	)			(175	)
Total revenues			805				783				828				696				3,112				475				547				529				1,551
Segment costs and expenses:
NGL cost of goods sold			28				20				19				23				90				19				16				14				49
Olefins cost of goods sold			51				69				46				65				231				62				101				89				252
Marketing cost of goods sold			684				681				752				629				2,746				381				376				340				1,097
Other cost of goods sold			12				10				8				7				37				6				4				2				12
Net insurance recoveries—Geismar Incident			(119	)			(42	)			—				(71	)			(232	)			—				(126	)			—				(126	)
Other segment costs and expenses			54				58				70				83				265				66				88				71				225
Intrasegment eliminations			(77	)			(76	)			(72	)			(74	)			(299	)			(54	)			(61	)			(60	)			(175	)
Total segment costs and expenses			633				720				823				662				2,838				480				398				456				1,334
Proportional Modified EBITDA of equity-method investments			10				9				12				19				50				11				9				12				32
Modified EBITDA			182				72				17				53				324				6				158				85				249
Adjustments			54				96				5				(66	)			89				1				(125	)			—				(124	)
Adjusted EBITDA		$	236			$	168			$	22			$	(13	)		$	413			$	7			$	33			$	85			$	125
Operating statistics
Ethane equity sales (million gallons)			27				28				28				33				116				36				33				40				109
Non-ethane equity sales (million gallons)			30				18				19				35				102				39				32				29				100
NGL equity sales (million gallons)			57				46				47				68				218				75				65				69				209
Ethane production (million gallons)			29				29				29				34				121				36				33				40				109
Non-ethane production (million gallons)			30				28				28				31				117				31				27				34				92
NGL production (million gallons)			59				57				57				65				238				67				60				74				201
Petrochemical Services
Geismar ethylene sales volumes (million lbs)			—				—				—				—				—				2				213				404				619
Geismar ethylene margin ($/lb) (1)		$	—			$	—			$	—			$	—			$	—			$	—			$	0.21			$	0.16				0.18
Canadian propylene sales volumes (millions lbs)			32				34				34				43				143				39				38				44				121
Canadian alky feedstock sales volumes (million gallons)			7				7				6				7				27				7				6				6				19
Overland Pass Pipeline Company LLC (equity investment)—100%
NGL Transportation volumes (Mbbls)			8,612				8,926				9,482				10,118				37,138				10,845				13,860				15,075				39,780

 

(1)

Ethylene margin and ethylene margin per pound are calculated using financial results determined in accordance with GAAP, which include realized ethylene sales prices and ethylene COGS. Realized sales and COGS per unit metrics may vary from publicly quoted market indices or spot prices due to various factors, including, but not limited to, basis differentials, transportation costs, contract provisions, and inventory accounting methods.

---

Williams Partners L.P.

Capital Expenditures and Investments

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Capital expenditures:
Access Midstream		$	—			$	—			$	165			$	133			$	298			$	133			$	109			$	107			$	349
Northeast G&P			359				291				288				253				1,191				115				114				95				324
Atlantic-Gulf			180				412				319				387				1,298				361				384				383				1,128
West			22				27				120				100				269				50				52				47				149
NGL & Petchem Services			161				211				136				120				628				75				55				59				189
Other			2				2				1				3				8				1				1				1				3
Total*		$	724			$	943			$	1,029			$	996			$	3,692			$	735			$	715			$	692			$	2,142
Purchase of businesses:
Access Midstream		$	—			$	—			$	—			$	—			$	—			$	—			$	112			$	—			$	112
NGL & Petchem Services**			25				31				—				(56	)			—				—				—				—				—
Total		$	25			$	31			$	—			$	(56	)		$	—			$	—			$	112			$	—			$	112
Purchase of investments:
Access Midstream		$	—			$	—			$	65			$	105			$	170			$	50			$	393			$	—			$	443
Northeast G&P			163				6				12				7				188				10				5				29				44
Atlantic-Gulf			51				9				21				25				106				20				—				15				35
NGL & Petchem Services			1				1				1				1				4				3				2				1				6
Total		$	215			$	16			$	99			$	138			$	468			$	83			$	400			$	45			$	528
Summary:
Access Midstream		$	—			$	—			$	230			$	238			$	468			$	183			$	614			$	107			$	904
Northeast G&P			522				297				300				260				1,379				125				119				124				368
Atlantic-Gulf			231				421				340				412				1,404				381				384				398				1,163
West			22				27				120				100				269				50				52				47				149
NGL & Petchem Services			187				243				137				65				632				78				57				60				195
Other			2				2				1				3				8				1				1				1				3
Total		$	964			$	990			$	1,128			$	1,078			$	4,160			$	818			$	1,227			$	737			$	2,782
Capital expenditures incurred, purchase of businesses, and purchase of investments:
Increases to property, plant, and equipment		$	769			$	867			$	1,017			$	918			$	3,571			$	645			$	731			$	673			$	2,049
Purchase of businesses			25				31				—				(56	)			—				—				112				—				112
Purchase of investments			215				16				99				138				468				83				400				45				528
Total		$	1,009			$	914			$	1,116			$	1,000			$	4,039			$	728			$	1,243			$	718			$	2,689
*Increases to property, plant, and equipment		$	769			$	867			$	1,017			$	918			$	3,571			$	645			$	731			$	673			$	2,049
Changes in related accounts payable and accrued liabilities			(45	)			76				12				78				121				90				(16	)			19				93
Capital expenditures		$	724			$	943			$	1,029			$	996			$	3,692			$	735			$	715			$	692			$	2,142

 

**	These amounts relate to adjustments from the acquisition of certain Canadian operations from a subsidiary of Williams.