Form 10-Q WILLIAMS PARTNERS L.P. For: Jun 30

Form 10-Q WILLIAMS PARTNERS L.P. For: Jun 30

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August 2, 2016 8:47 AM EDT

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended June 30, 2016



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

For the transition period from _____________ to _____________

Commission file number 1-34831

WILLIAMS PARTNERS L.P.

(Exact name of registrant as specified in its charter)



DELAWARE		20-2485124
(State or other jurisdiction of incorporation or organization)		(I.R.S. 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

NO CHANGE

(Former name, former address and former fiscal year, if changed since last report)

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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The registrant had 588,937,737 common units and 15,919,628 Class B units outstanding as of July 28, 2016.

Williams Partners L.P.

Index



Part I. Financial Information		Page
Item 1. Financial Statements
Consolidated Statement of Comprehensive Income – Three and Six Months Ended June 30, 2016 and 2015		6
Consolidated Balance Sheet – June 30, 2016 and December 31, 2015		7
Consolidated Statement of Changes in Equity – Six Months Ended June 30, 2016		8
Consolidated Statement of Cash Flows – Six Months Ended June 30, 2016 and 2015		9
Notes to Consolidated Financial Statements		10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Item 3. Quantitative and Qualitative Disclosures About Market Risk		53
Item 4. Controls and Procedures		54
Part II. Other Information		54
Item 1. Legal Proceedings		54
Item 1A. Risk Factors		55
Item 6. Exhibits		56

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 (Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions and other matters.

All statements, other than statements of historical facts, included in this report that address activities, events or developments that we expect, believe or anticipate will exist or may occur in the future, are forward-looking statements. 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:


•	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 of our business and operations;


•	Financial condition and liquidity;


•	Business strategy;


•	Cash flow from operations or results of operations;


•	Seasonality of certain business components;


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


•	Demand for our services.

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 report. 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:


•	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;


•	Whether we will be able to effectively execute our financing plan including the establishment of a distribution reinvestment plan (DRIP) and the receipt of anticipated levels of proceeds from planned asset sales;


•	Availability of supplies, including lower than anticipated volumes from third parties served by our midstream business, and market demand;


•	Volatility of pricing including the effect of lower than anticipated energy commodity prices and margins;


•	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;


•	Whether we are able to successfully identify, evaluate and timely execute our capital projects and other investment opportunities in accordance with our forecasted capital expenditures budget;


•	Our ability to successfully expand our facilities and operations;


•	Development of alternative energy sources;


•	Availability of adequate insurance coverage and the impact of operational and developmental hazards and unforeseen interruptions;


•	The impact of existing and future laws, regulations, the regulatory environment, environmental liabilities, and litigation as well as our ability to obtain permits, and achieve favorable rate proceeding outcomes;


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


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


•	Changes in maintenance and construction costs;


•	Changes in the current geopolitical situation;


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


•	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 and physical damage to our facilities;


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


•	Additional risks described in our filings with the 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 report. 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.

Limited partner units are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. You should carefully consider the risk factors discussed below in addition to the other information in this report. If any of the following risks were actually to occur, our business, results of operations and financial condition could be materially adversely affected. In that case, we might not be able to pay distributions on our common units, the trading price of our common units could decline, and unitholders could lose all or part of their investment.

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 26, 2016 and in Part II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q.

DEFINITIONS

The following is a listing of certain abbreviations, acronyms, and other industry terminology used throughout this Form 10-Q.

Measurements:

Barrel: One barrel of petroleum products that equals 42 U.S. gallons

Bcf : One billion cubic feet of natural gas

Bcf/d: One billion cubic feet of natural gas per day

British Thermal Unit (Btu): A unit of energy needed to raise the temperature of one pound of water by one degree

Fahrenheit

Dekatherms (Dth): A unit of energy equal to one million British thermal units

Mbbls/d: One thousand barrels per day

Mdth/d: One thousand dekatherms per day

MMcf/d: One million cubic feet per day

MMdth: One million dekatherms or approximately one trillion British thermal units

MMdth/d: One million dekatherms per day

Tbtu: One trillion British thermal units

Consolidated Entities:

ACMP: Access Midstream Partners, L.P. prior to its merger with Pre-merger WPZ

Cardinal: Cardinal Gas Services, L.L.C.

Constitution: Constitution Pipeline Company, LLC

Gulfstar One: Gulfstar One LLC

Jackalope: Jackalope Gas Gathering Services, L.L.C.

Northwest Pipeline: Northwest Pipeline, LLC

Pre-merger WPZ: Williams Partners L.P. prior to its merger with ACMP

Transco: Transcontinental Gas Pipe Line Company, LLC

Partially Owned Entities: Entities in which we do not own a 100 percent ownership interest and which, as of June 30, 2016, we account for as an equity-method investment, including principally the following:

Aux Sable: Aux Sable Liquid Products LP

Caiman II: Caiman Energy II, LLC

Discovery: Discovery Producer Services LLC

Gulfstream: Gulfstream Natural Gas System, L.L.C.

Laurel Mountain: Laurel Mountain Midstream, LLC

OPPL: Overland Pass Pipeline Company LLC

UEOM: Utica East Ohio Midstream LLC

Government and Regulatory:

EPA: Environmental Protection Agency

FERC: Federal Energy Regulatory Commission

SEC: Securities and Exchange Commission

Other:

Williams: The Williams Companies, Inc. and, unless the context otherwise indicates, its subsidiaries (other than Williams Partners L.P. and its subsidiaries)

Energy Transfer or ETE: Energy Transfer Equity, L.P.

ETC: Energy Transfer Corp LP

Merger Agreement: Merger Agreement and Plan of Merger of Williams with Energy Transfer and certain of its affiliates

ETC Merger: Merger wherein Williams was to be merged into ETC

GAAP: U.S. generally accepted accounting principles

Fractionation: The process by which a mixed stream of natural gas liquids is separated into constituent products, such as ethane, propane, and butane

IDR: Incentive distribution right

NGLs: Natural gas liquids; natural gas liquids result from natural gas processing and crude oil refining and are

used as petrochemical feedstocks, heating fuels, and gasoline additives, among other applications

NGL margins: NGL revenues less any applicable Btu replacement cost, plant fuel, and third-party transportation and fractionation

RGP Splitter: Refinery grade propylene splitter

PART I – FINANCIAL INFORMATION

Williams Partners L.P.

Consolidated Statement of Comprehensive Income (Loss)

(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(Millions, except per-unit amounts)
Revenues:
Service revenues	$	1,210		$	1,231		$	2,436		$	2,423
Product sales	520			599			948			1,118
Total revenues	1,730			1,830			3,384			3,541
Costs and expenses:
Product costs	393			494			710			957
Operating and maintenance expenses	386			431			768			811
Depreciation and amortization expenses	432			419			867			838
Selling, general, and administrative expenses	139			164			320			357
Net insurance recoveries – Geismar Incident	—			(126		)	—			(126		)
Impairment of long-lived assets	396			24			402			27
Other (income) expense – net	24			14			48			28
Total costs and expenses	1,770			1,420			3,115			2,892
Operating income (loss)	(40		)	410			269			649
Equity earnings (losses)	101			93			198			144
Impairment of equity-method investments	—			—			(112		)	—
Other investing income (loss) – net	1			—			1			1
Interest incurred	(239		)	(215		)	(479		)	(424		)
Interest capitalized	8			12			19			29
Other income (expense) – net	12			32			27			48
Income (loss) before income taxes	(157		)	332			(77		)	447
Provision (benefit) for income taxes	(80		)	—			(79		)	3
Net income (loss)	(77		)	332			2			444
Less: Net income (loss) attributable to noncontrolling interests	13			32			42			55
Net income (loss) attributable to controlling interests	$	(90	)	$	300		$	(40	)	$	389
Allocation of net income (loss) for calculation of earnings per common unit:
Net income (loss) attributable to controlling interests	$	(90	)	$	300		$	(40	)	$	389
Allocation of net income (loss) to general partner	207			216			409			411
Allocation of net income (loss) to Class B units	(8		)	1			(12		)	(1		)
Allocation of net income (loss) to Class D units	—			—			—			68
Allocation of net income (loss) to common units	$	(289	)	$	83		$	(437	)	$	(89	)
Basic earnings (loss) per common unit:
Net income (loss) per common unit	$	(.49	)	$	.14		$	(.74	)	$	(.16	)
Weighted-average number of common units outstanding (thousands)	588,607			586,696			588,585			547,069
Diluted earnings (loss) per common unit:
Net income (loss) per common unit	$	(.49	)	$	.14		$	(.74	)	$	(.16	)
Weighted-average number of common units outstanding (thousands)	588,607			587,088			588,585			547,069
Cash distributions per common unit	$	.85		$	.85		$	1.70		$	1.70

Other comprehensive income (loss):
Foreign currency translation adjustments	5			14			77			(73		)
Other comprehensive income (loss)	5			14			77			(73		)
Comprehensive income (loss)	(72		)	346			79			371
Less: Comprehensive income attributable to noncontrolling interests	13			32			42			55
Comprehensive income (loss) attributable to controlling interests	$	(85	)	$	314		$	37		$	316

See accompanying notes.

Williams Partners L.P.

Consolidated Balance Sheet

(Unaudited)



	June 30, 2016			December 31, 2015
	(Dollars in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	101		$	96
Trade accounts and notes receivable (net of allowance of $5 at June 30, 2016 and $3 at December 31, 2015)	722			1,026
Inventories	122			127
Assets held for sale (Note 9)	932			13
Other current assets	177			177
Total current assets	2,054			1,439
Investments	7,125			7,336
Property, plant, and equipment, at cost	37,673			37,833
Accumulated depreciation	(9,855		)	(9,233		)
Property, plant, and equipment – net	27,818			28,600
Goodwill	47			47
Other intangible assets – net of accumulated amortization	9,791			9,969
Regulatory assets, deferred charges, and other	459			479
Total assets	$	47,294		$	47,870
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable:
Trade	$	679		$	648
Affiliate	102			141
Accrued interest	262			231
Asset retirement obligations	68			57
Liabilities held for sale (Note 9)	151			—
Other accrued liabilities	339			469
Long-term debt due within one year	786			176
Commercial paper	196			499
Total current liabilities	2,583			2,221
Long-term debt	19,116			19,001
Asset retirement obligations	849			857
Deferred income tax liabilities	21			119
Regulatory liabilities, deferred income, and other	1,275			1,066
Contingent liabilities (Note 10)
Equity:
Partners’ equity:
Common units (588,625,106 and 588,546,022 units outstanding at June 30, 2016 and December 31, 2015, respectively)	18,503			19,730
Class B units (15,919,628 and 14,784,015 units outstanding at June 30, 2016 and December 31, 2015, respectively)	764			771
General partner	2,533			2,552
Accumulated other comprehensive income (loss)	(95		)	(172		)
Total partners’ equity	21,705			22,881
Noncontrolling interests in consolidated subsidiaries	1,745			1,725
Total equity	23,450			24,606
Total liabilities and equity	$	47,294		$	47,870

See accompanying notes.

Williams Partners L.P.

Consolidated Statement of Changes in Equity

(Unaudited)



	Williams Partners L.P.
	Limited Partners
	Common Units			Class B Units			General Partner			Accumulated Other Comprehensive Income (Loss)			Total Partners’ Equity			Noncontrolling Interests			Total Equity
	(Millions)
Balance – December 31, 2015	$	19,730		$	771		$	2,552		$	(172	)	$	22,881		$	1,725		$	24,606
Net income (loss)	(238		)	(7		)	205			—			(40		)	42			2
Other comprehensive income (loss)	—			—			—			77			77			—			77
Cash distributions	(1,001		)	—			(230		)	—			(1,231		)	—			(1,231		)
Contributions from general partner	—			—			6			—			6			—			6
Contributions from noncontrolling interests	—			—			—			—			—			22			22
Distributions to noncontrolling interests	—			—			—			—			—			(45		)	(45		)
Other	12			—			—			—			12			1			13
Net increase (decrease) in equity	(1,227		)	(7		)	(19		)	77			(1,176		)	20			(1,156		)
Balance – June 30, 2016	$	18,503		$	764		$	2,533		$	(95	)	$	21,705		$	1,745		$	23,450

See accompanying notes.

Williams Partners L.P.

Consolidated Statement of Cash Flows

(Unaudited)



	Six Months Ended June 30,
	2016			2015
	(Millions)
OPERATING ACTIVITIES:
Net income (loss)	$	2		$	444
Adjustments to reconcile to net cash provided (used) by operating activities:
Depreciation and amortization	867			838
Provision (benefit) for deferred income taxes	(80		)	2
Impairment of equity-method investments	112			—
Impairment of and net (gain) loss on sale of Property, plant, and equipment	405			28
Amortization of stock-based awards	14			16
Cash provided (used) by changes in current assets and liabilities:
Accounts and notes receivable	297			185
Inventories	—			64
Other current assets and deferred charges	(20		)	(45		)
Accounts payable	24			(38		)
Accrued liabilities	58			(14		)
Affiliate accounts receivable and payable – net	(44		)	42
Other, including changes in noncurrent assets and liabilities	30			(29		)
Net cash provided (used) by operating activities	1,665			1,493
FINANCING ACTIVITIES:
Proceeds from (payments of) commercial paper – net	(304		)	942
Proceeds from long-term debt	2,938			4,825
Payments of long-term debt	(2,201		)	(4,007		)
Contributions from general partner	6			4
Distributions to limited partners and general partner	(1,231		)	(1,450		)
Distributions to noncontrolling interests	(45		)	(32		)
Contributions from noncontrolling interests	22			57
Contributions from The Williams Companies, Inc. – net	—			20
Payments for debt issuance costs	(8		)	(29		)
Contribution to Gulfstream for repayment of debt	(148		)	—
Other – net	—			14
Net cash provided (used) by financing activities	(971		)	344
INVESTING ACTIVITIES:
Property, plant, and equipment:
Capital expenditures (1)	(981		)	(1,450		)
Net proceeds from dispositions	7			6
Purchases of businesses, net of cash acquired	—			(112		)
Purchases of and contributions to equity-method investments	(122		)	(483		)
Distributions from unconsolidated affiliates in excess of cumulative earnings	261			122
Other – net	153			95
Net cash provided (used) by investing activities	(682		)	(1,822		)
Increase (decrease) in cash and cash equivalents	12			15
Cash and cash equivalents held for sale	(7		)	—
Cash and cash equivalents at beginning of year	96			171
Cash and cash equivalents at end of period	$	101		$	186
_________
(1) Increases to property, plant, and equipment	$	(983	)	$	(1,376	)
Changes in related accounts payable and accrued liabilities	2			(74		)
Capital expenditures	$	(981	)	$	(1,450	)

See accompanying notes.

Williams Partners L.P.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – General, Description of Business, and Basis of Presentation

General

Our accompanying interim consolidated financial statements do not include all the notes in our annual financial statements and, therefore, should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2015, in Exhibit 99.1 of our Form 8-K dated May 27, 2016. The accompanying unaudited financial statements include all normal recurring adjustments and others that, in the opinion of management, are necessary to present fairly our interim financial statements.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Unless the context clearly indicates otherwise, references in this report to “we,” “our,” “us,” or like terms refer to Williams Partners L.P. and its subsidiaries. Unless the context clearly indicates otherwise, references to “we,” “our,” and “us” include the operations in which we own interests accounted for as equity-method investments that are not consolidated in our financial statements. When we refer to our equity investees by name, we are referring exclusively to their businesses and operations.

We are a Delaware limited partnership whose common units are listed and traded on the New York Stock Exchange. WPZ GP LLC, a Delaware limited liability company wholly owned by The Williams Companies, Inc. (Williams), serves as our general partner. As of June 30, 2016, Williams owns an approximate 58 percent limited partner interest, a 2 percent general partner interest, and incentive distribution rights (IDRs) in us.

WPZ Public Unit Exchange

On May 12, 2015, we entered into an agreement for a unit-for-stock transaction whereby Williams would have acquired all of our publicly held outstanding common units in exchange for shares of Williams’ common stock (WPZ Public Unit Exchange).

On September 28, 2015, we entered into a Termination Agreement and Release (Termination Agreement), terminating the WPZ Public Unit Exchange. Under the terms of the Termination Agreement, Williams was required to pay us a $428 million termination fee, which settled through a reduction of quarterly incentive distributions payable to Williams (such reduction not to exceed $209 million per quarter). Our November 2015, February 2016, and May 2016 distributions to Williams were reduced by $209 million, $209 million, and $10 million, respectively, related to this termination fee.

Williams’ Merger Agreement with Energy Transfer

On September 28, 2015, Williams publicly announced in a press release that it had entered into an Agreement and Plan of Merger (Merger Agreement) with Energy Transfer Equity, L.P. (Energy Transfer) and certain of its affiliates. The Merger Agreement provided that, subject to the satisfaction of customary closing conditions, Williams would be merged with and into the newly formed Energy Transfer Corp LP (ETC) (ETC Merger), with ETC surviving the ETC Merger. Energy Transfer formed ETC as a limited partnership that would be treated as a corporation for U.S. federal income tax purposes. Immediately following the completion of the ETC Merger, ETC would contribute to Energy Transfer all of the assets and liabilities of Williams in exchange for the issuance by Energy Transfer to ETC of a number of Energy Transfer Class E common units equal to the number of ETC common shares issued to Williams stockholders in the ETC Merger.

Notes (Continued)

On June 29, 2016, Energy Transfer provided Williams written notice terminating the Merger Agreement, citing the alleged failure of certain conditions under the Merger Agreement.

ACMP Merger

On February 2, 2015, Williams Partners L.P. merged with and into Access Midstream Partners, L.P. (ACMP Merger). For the purpose of these financial statements and notes, Williams Partners L.P. (WPZ) refers to the renamed merged partnership, while Pre-merger Access Midstream Partners, L.P. (ACMP) and Pre-merger Williams Partners L.P. (Pre-merger WPZ) refer to the separate partnerships prior to the consummation of the ACMP Merger and subsequent name change. The net assets of Pre-merger WPZ and ACMP were combined at Williams’ historical basis. Williams’ basis in ACMP reflected its business combination accounting resulting from acquiring control of ACMP on July 1, 2014.

Description of Business

Our operations are located in North America. Effective January 1, 2016, businesses located in the Marcellus and Utica shale plays within the former Access Midstream segment are now managed, and thus presented, within the Northeast G&P segment. The remaining Access Midstream businesses are now presented as the Central segment. As a result, beginning with the reporting of first quarter 2016, our operations are organized into the following reportable segments: Central, Northeast G&P, Atlantic-Gulf, West, and NGL & Petchem Services. Prior period segment disclosures have been recast for these segment changes.

Central provides domestic gathering, treating, and compression services to producers under long-term, fixed-fee contracts. Its primary operating areas are in the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of south Texas, the Haynesville Shale region of northwest Louisiana, and the Mid-Continent region which includes the Anadarko, Arkoma, Delaware, and Permian basins. Central also includes a 50 percent equity-method investment in the Delaware basin gas gathering system in the Mid-Continent region.

Northeast G&P is comprised of our midstream gathering and processing businesses in the Marcellus Shale region primarily in Pennsylvania, New York, and West Virginia and the Utica Shale region of eastern Ohio, as well as a 62 percent equity-method investment in Utica East Ohio Midstream, LLC (UEOM), a 69 percent equity-method investment in Laurel Mountain Midstream, LLC (Laurel Mountain), a 58 percent equity-method investment in Caiman Energy II, LLC, and Appalachia Midstream Services, LLC, which owns equity-method investments with an approximate average 45 percent interest in multiple gathering systems in the Marcellus Shale (Appalachia Midstream Investments).

Atlantic-Gulf is comprised of our interstate natural gas pipeline, Transcontinental Gas Pipe Line Company, LLC (Transco), and significant natural gas gathering and processing and crude oil production handling and transportation assets in the Gulf Coast region, including a 51 percent interest in Gulfstar One LLC (Gulfstar One) (a consolidated entity), which is a proprietary floating production system, as well as a 50 percent equity-method investment in Gulfstream Natural Gas System, L.L.C. (Gulfstream), a 41 percent interest in Constitution Pipeline Company, LLC (Constitution) (a consolidated entity), which is under development, and a 60 percent equity-method investment in Discovery Producer Services LLC (Discovery).

West is comprised of our gathering, processing, and treating operations in New Mexico, Colorado, and Wyoming, and our interstate natural gas pipeline, Northwest Pipeline LLC (Northwest Pipeline).

NGL & Petchem Services is comprised of our 88.5 percent undivided interest in an olefins production facility in Geismar, Louisiana, along with a refinery grade propylene splitter and pipelines in the Gulf Coast region, an oil sands offgas processing plant located near Fort McMurray, Alberta, and a natural gas liquid (NGL)/olefin fractionation facility at Redwater, Alberta. As of June 30, 2016, our Canadian operations are classified as held for sale. (See Note 9 – Fair Value Measurements and Guarantees.) This segment also includes our NGL and natural gas marketing business, storage facilities, and an undivided 50 percent interest in an NGL fractionator near Conway, Kansas, and a 50 percent equity-method investment in Overland Pass Pipeline, LLC (OPPL).

Notes (Continued)

Basis of Presentation

Significant risks and uncertainties

During the second quarter of 2016, we evaluated an asset group within our Central segment for impairment as a result of an increased likelihood of gas gathering contract restructuring with certain producers and lower volume projections. Our assessment included probability-weighted scenarios of undiscounted future cash flows that considered variables including terms of our current contract, as well as potential revised terms of a restructured contract, counterparty performance, and pricing assumptions. This assessment resulted in the undiscounted cash flows slightly exceeding the approximate $1.6 billion carrying value of the asset group and no impairment was recorded. The use of different judgments and assumptions associated with the measurement variables noted, particularly the assumed contractual terms, expected volumes, and rates, could result in reduced levels of future cash flows which could result in a significant impairment.

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income (loss) (AOCI) is substantially comprised of foreign currency translation adjustments. These adjustments did not impact Net income (loss) in any of the periods presented.

Accounting standards issued but not yet adopted

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (ASU 2016-13). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. The new standard is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted. The new standard requires varying transition methods for the different categories of amendments. We are evaluating the impact of the new standard on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)” (ASU 2016-02). ASU 2016-02 establishes a comprehensive new lease accounting model. The new standard clarifies the definition of a lease, requires a dual approach to lease classification similar to current lease classifications, and causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset. The new standard is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements. We are evaluating the impact of the new standard on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09 establishing Accounting Standards Codification (ASC) Topic 606, “Revenue from Contracts with Customers” (ASC 606). ASC 606 establishes a comprehensive new revenue recognition model designed to depict the transfer of goods or services to a customer in an amount that reflects the consideration the entity expects to be entitled to receive in exchange for those goods or services and requires significantly enhanced revenue disclosures. In August 2015, the FASB issued ASU 2015-14 “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” (ASU 2015-14). Per ASU 2015-14, the standard is effective for interim and annual reporting periods beginning after December 15, 2017. ASC 606 allows either full retrospective or modified retrospective transition and early adoption is permitted for annual periods beginning after December 15, 2016. We continue to evaluate both the impact of this new standard on our consolidated financial statements and the transition method we will utilize for adoption.

Notes (Continued)

Note 2 – Variable Interest Entities

As of June 30, 2016, we consolidate the following variable interest entities (VIEs):

Gulfstar One

We own a 51 percent interest in Gulfstar One, a subsidiary that, due to certain risk-sharing provisions in its customer contracts, is a VIE. Gulfstar One includes a proprietary floating-production system, Gulfstar FPS, and associated pipelines which provide production handling and gathering services for the Tubular Bells oil and gas discovery in the eastern deepwater Gulf of Mexico. We are the primary beneficiary because we have the power to direct the activities that most significantly impact Gulfstar One’s economic performance. Construction of an expansion project is underway that will provide production handling and gathering services for the Gunflint oil and gas discovery in the eastern deepwater Gulf of Mexico. The expansion project is expected to be completed in two phases. The first phase went into service in July of 2016 and the second phase is expected to go into service in the fourth quarter of 2016. The current estimate of the total remaining construction cost for the expansion project is approximately $67 million, which we expect will be funded with revenues received from customers and capital contributions from us and the other equity partner on a proportional basis.

Constitution

We own a 41 percent interest in Constitution, a subsidiary that, due to shipper fixed-payment commitments under its long-term firm transportation contracts, is a VIE. We are the primary beneficiary because we have the power to direct the activities that most significantly impact Constitution’s economic performance. We, as construction manager for Constitution, are responsible for constructing the proposed pipeline connecting our gathering system in Susquehanna County, Pennsylvania, to the Iroquois Gas Transmission and the Tennessee Gas Pipeline systems. The total remaining cost of the project is estimated to be approximately $687 million, which we expect will be funded with capital contributions from us and the other equity partners on a proportional basis.

In December 2014, we received approval from the Federal Energy Regulatory Commission to construct and operate the Constitution pipeline. However, in April 2016, the New York State Department of Environmental Conservation (NYSDEC) denied a necessary water quality certification for the New York portion of the Constitution pipeline. We remain steadfastly committed to the project, and in May 2016, Constitution appealed the NYSDEC's denial of the certification and filed an action in federal court seeking a declaration that the State of New York's authority to exercise permitting jurisdiction over certain other environmental matters is preempted by federal law. In light of the NYSDEC's denial of the water quality certification and the actions taken to challenge the decision, the project in-service date is targeted as early as the second half of 2018, which assumes that the legal challenge process is satisfactorily and promptly concluded. An unfavorable resolution could result in the impairment of a significant portion of the capitalized project costs, which total $389 million on a consolidated basis at June 30, 2016, and are included within Property, plant, and equipment, at cost in the Consolidated Balance Sheet. Beginning in April 2016, we discontinued capitalization of development costs related to this project. It is also possible that we could incur certain supplier-related costs in the event of a prolonged delay or termination of the project.

Cardinal

We own a 66 percent interest in Cardinal Gas Services, L.L.C (Cardinal), a subsidiary that provides gathering services for the Utica region and is a VIE due to certain risks shared with customers. We are the primary beneficiary because we have the power to direct the activities that most significantly impact Cardinal’s economic performance. We expect to fund future expansion activity with capital contributions from us and the other equity partner on a proportional basis.

Jackalope

We own a 50 percent interest in Jackalope Gas Gathering Services, L.L.C (Jackalope), a subsidiary that provides gathering and processing services for the Powder River basin and is a VIE due to certain risks shared with customers. We are the primary beneficiary because we have the power to direct the activities that most significantly impact

Notes (Continued)

Jackalope’s economic performance. We expect to fund future expansion activity with capital contributions from us and the other equity partner on a proportional basis.

The following table presents amounts included in our Consolidated Balance Sheet that are for the use or obligation of our consolidated VIEs:



	June 30, 2016			December 31, 2015			Classification
	(Millions)
Assets (liabilities):
Cash and cash equivalents	$	66		$	70		Cash and cash equivalents
Accounts receivable	65			71			Trade accounts and notes receivable – net
Prepaid assets	4			2			Other current assets
Property, plant, and equipment – net	3,069			3,000			Property, plant, and equipment – net
Goodwill	47			47			Goodwill
Other intangible assets – net	1,410			1,436			Other intangible assets – net of accumulated amortization
Accounts payable	(71		)	(59		)	Accounts payable – trade
Accrued liabilities	(3		)	(14		)	Other accrued liabilities
Current deferred revenue	(63		)	(62		)	Other accrued liabilities
Noncurrent asset retirement obligations	(95		)	(93		)	Asset retirement obligations
Noncurrent deferred revenue associated with customer advance payments	(324		)	(331		)	Regulatory liabilities, deferred income, and other

Notes (Continued)

Note 3 – Allocation of Net Income (Loss) and Distributions

The allocation of net income (loss) among our general partner, limited partners, and noncontrolling interests is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(Millions)
Allocation of net income to general partner:
Net income (loss)	$	(77	)	$	332		$	2		$	444
Net income applicable to pre-merger operations allocated to general partner	—			—			—			(2		)
Net income applicable to noncontrolling interests	(13		)	(32		)	(42		)	(55		)
Costs charged directly to the general partner	—			—			—			20
Income (loss) subject to 2% allocation of general partner interest	(90		)	300			(40		)	407
General partner’s share of net income	2		%	2		%	2		%	2		%
General partner’s allocated share of net income (loss) before items directly allocable to general partner interest	(2		)	6			(1		)	8
Priority allocations, including incentive distributions, paid to general partner	201			211			206			423
Pre-merger net income allocated to general partner interest	—			—			—			2
Costs charged directly to the general partner	—			—			—			(20		)
Net income allocated to general partner’s equity	$	199		$	217		$	205		$	413

Net income (loss)	$	(77	)	$	332		$	2		$	444
Net income allocated to general partner’s equity	199			217			205			413
Net income (loss) allocated to Class B limited partners’ equity	(8		)	2			(7		)	(2		)
Net income allocated to Class D limited partners’ equity (1)	—			—			—			69
Net income allocated to noncontrolling interests	13			32			42			55
Net income (loss) allocated to common limited partners’ equity	$	(281	)	$	81		$	(238	)	$	(91	)

Adjustments to reconcile Net income (loss) allocated to common limited partners’ equity to Allocation of net income (loss) to common units:
Incentive distributions paid (2)	200			211			201			423
Incentive distributions declared (2) (3)	(210		)	(209		)	(410		)	(421		)
Impact of unit issuance timing and other	2			—			10			—
Allocation of net income (loss) to common units	$	(289	)	$	83		$	(437	)	$	(89	)


(1)	Includes amortization of the beneficial conversion feature associated with the Pre-merger WPZ Class D units of $68 million for the six months ended June 30, 2015. See following discussion of Class D units.


(2)	Incentive distributions paid for the 2016 periods and Incentive distributions declared for the six months ended June 30, 2016, reflect the waiver associated with the Termination Agreement. (See Note 1 – General, Description of Business, and Basis of Presentation.)


(3)	The Board of Directors of our general partner declared a cash distribution of $0.85 per common unit on July 26, 2016, to be paid on August 12, 2016, to unitholders of record at the close of business on August 5, 2016.

Class B Units

The Class B units are not entitled to cash distributions. Instead, prior to conversion into common units, the Class B units receive quarterly distributions of additional paid-in-kind Class B units. Effective February 10, 2015, each Class B unit became convertible at the election of either us or the holders of such Class B unit into a common unit on a one-

Notes (Continued)

for-one basis. The Board of Directors of our general partner has authorized the issuance of 395,207 Class B units associated with the second-quarter distribution, to be issued on August 12, 2016.

Class D Units

The Pre-merger WPZ Class D units, issued in February 2014 in conjunction with our acquisition of certain Canadian operations, were issued at a discount to the market price of Pre-merger WPZ’s common units, into which they were convertible. The remaining unamortized balance was recognized in the first quarter of 2015 due to the ACMP Merger. All Pre-merger WPZ Class D units were converted into common units in conjunction with the ACMP Merger.

Note 4 – Investing Activities

Investing Income

The six months ended June 30, 2016, includes other-than-temporary impairment charges of $59 million and $50 million related to certain equity-method investments in the Delaware basin gas gathering system and Laurel Mountain, respectively (see Note 9 – Fair Value Measurements and Guarantees).

Investments

On September 24, 2015, we received a special distribution of $396 million from Gulfstream reflecting our proportional share of the proceeds from new debt issued by Gulfstream. The new debt was issued to refinance Gulfstream’s debt maturities. Subsequently, we contributed $248 million and $148 million to Gulfstream for our proportional share of amounts necessary to fund debt maturities of $500 million due on November 1, 2015 and $300 million due on June 1, 2016, respectively.

Summarized Results of Operations for Certain Equity-Method Investments

The table below presents aggregated selected income statement data for our investments in Discovery, Gulfstream, and Appalachia Midstream Investments, which are considered significant.



	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
	(Millions)
Gross revenue	$	216	$	242	$	422	$	417
Operating income	125		123		244		203
Net income	106		106		204		168

Notes (Continued)

Note 5 – Other Income and Expenses

The following table presents certain gains or losses reflected in Other (income) expense – net within Costs and expenses in our Consolidated Statement of Comprehensive Income (Loss):



	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
	(Millions)
Atlantic-Gulf
Amortization of regulatory assets associated with asset retirement obligations	$	9	$	9	$	17	$	17
NGL & Petchem Services
Net foreign currency exchange (gains) losses (1)	—		1		11		(4		)


(1)	Primarily relates to losses incurred on foreign currency transactions and the remeasurement of U.S. dollar denominated current assets and liabilities within our Canadian operations.

ACMP Merger and Transition

Six months ended June 30, 2016

Selling, general, and administrative expenses includes $5 million for the six months ended June 30, 2016, associated with the ACMP Merger and transition. These costs are primarily reflected within the Central segment.

Three and six months ended June 30, 2015

Selling, general, and administrative expenses includes $5 million and $34 million for the three and six months ended June 30, 2015, respectively, primarily related to professional advisory fees and employee transition costs associated with the ACMP Merger and transition. These costs are primarily reflected within the Central segment.

Operating and maintenance expenses includes $8 million and $12 million for the three and six months ended June 30, 2015, respectively, of transition costs from the ACMP Merger within the Central segment.

Interest incurred includes transaction-related financing costs of $2 million for the six months ended June 30, 2015, from the ACMP Merger.

Geismar Incident

On June 13, 2013, an explosion and fire occurred at our Geismar olefins plant. The incident rendered the facility temporarily inoperable (Geismar Incident). We received $126 million of insurance recoveries during the three and six months ended June 30, 2015, reported within the NGL & Petchem Services segment and reflected as gains in Net insurance recoveries - Geismar Incident.

Additional Items

Three and six months ended June 30, 2016

Service revenues have been reduced by $15 million for the six months ended June 30, 2016, related to potential refunds associated with a ruling received in certain rate case litigation within the Atlantic-Gulf segment.

Selling, general, and administrative expenses and Operating and maintenance expenses include $25 million for the six months ended June 30, 2016, in severance and other related costs associated with an approximate 10 percent reduction in workforce in the first quarter of 2016. Amounts by segment are as follows:

Notes (Continued)



	Six Months Ended June 30, 2016
	(Millions)
Central	$	6
Northeast G&P	3
Atlantic-Gulf	8
West	4
NGL & Petchem Services	4

Other income (expense) – net below Operating income (loss) includes $12 million and $29 million for the three and six months ended June 30, 2016, respectively, for allowance for equity funds used during construction, within the Atlantic-Gulf segment.

Three and six months ended June 30, 2015

Other income (expense) – net below Operating income (loss) includes $19 million and $36 million for the three and six months ended June 30, 2015, respectively, for allowance for equity funds used during construction, within the Atlantic-Gulf segment. Other income (expense) – net below Operating income (loss) also includes a $14 million gain for the three and six months ended June 30, 2015, resulting from the early retirement of certain debt.

Note 6 – Provision (Benefit) for Income Taxes

The Provision (benefit) for income taxes includes:



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(Millions)
Current:
State	$	1		$	1		$	1		$	1
Foreign	—			—			—			—
	1			1			1			1
Deferred:
State	(6		)	(7		)	(4		)	(6		)
Foreign	(75		)	6			(76		)	8
	(81		)	(1		)	(80		)	2

Provision (benefit) for income taxes	$	(80	)	$	—		$	(79	)	$	3

The effective income tax rates for the three and six months ended June 30, 2016, are greater than the federal statutory rate due to the tax effect of a $341 million impairment associated with our Canadian operations (see Note 9 – Fair Value Measurements and Guarantees) and Texas franchise tax, partially offset by income not subject to U.S. federal tax.

The effective income tax rates for the three and six months ended June 30, 2015, are less than the federal statutory rate due to income not subject to U.S. federal tax and the effect of a Texas franchise tax rate decrease, partially offset by taxes on foreign operations. The 2015 state deferred benefit includes $7 million related to the impact of a Texas franchise tax rate decrease. The 2015 foreign deferred provision includes $8 million related to the impact of an Alberta provincial tax rate increase.

Notes (Continued)

Note 7 – Inventories



	June 30, 2016		December 31, 2015
	(Millions)
Natural gas liquids, olefins, and natural gas in underground storage	$	53	$	57
Materials, supplies, and other	69		70
	$	122	$	127

Note 8 – Debt and Banking Arrangements

Long-Term Debt

Issuances and retirements

On January 22, 2016, Transco issued $1 billion of 7.85 percent senior unsecured notes due 2026 to investors in a private debt placement. Transco used the net proceeds to repay debt and to fund capital expenditures. As part of the new issuance, Transco entered into a registration rights agreement with the initial purchasers of the unsecured notes. Transco is obligated to file and consummate a registration statement for an offer to exchange the notes for a new issue of substantially identical notes registered under the Securities Act of 1933, as amended, within 365 days from closing and to use commercially reasonable efforts to complete the exchange offer. Transco is required to provide a shelf registration statement to cover resales of the notes under certain circumstances. If Transco fails to fulfill these obligations, additional interest will accrue on the affected securities. The rate of additional interest will be 0.25 percent per annum on the principal amount of the affected securities for the first 90-day period immediately following the occurrence of default, increasing by an additional 0.25 percent per annum with respect to each subsequent 90-day period thereafter, up to a maximum amount for all such defaults of 0.5 percent annually. Following the cure of any registration defaults, the accrual of additional interest will cease.

Transco retired $200 million of 6.4 percent senior unsecured notes that matured on April 15, 2016.

Northwest Pipeline retired $175 million of 7 percent senior unsecured notes that matured on June 15, 2016.

Commercial Paper Program

As of June 30, 2016, we had $196 million of Commercial paper outstanding under our $3 billion commercial paper program with a weighted average interest rate of 1.27 percent.

Credit Facilities



	June 30, 2016
	Stated Capacity		Outstanding
	(Millions)
Long-term credit facility (1)	$	3,500	$	1,425
Letters of credit under certain bilateral bank agreements			2
Short-term credit facility (2)	150		—


(1)	In managing our available liquidity, we do not expect a maximum outstanding amount in excess of the capacity of our credit facility inclusive of any outstanding amounts under our commercial paper program.


(2)	This facility expires August 24, 2016.

Notes (Continued)

Note 9 – Fair Value Measurements and Guarantees

The following table presents, by level within the fair value hierarchy, certain of our financial assets and liabilities. The carrying values of cash and cash equivalents, accounts receivable, commercial paper, and accounts payable approximate fair value because of the short-term nature of these instruments. Therefore, these assets and liabilities are not presented in the following table.



							Fair Value Measurements Using
	Carrying Amount			Fair Value			Quoted Prices In Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(Millions)
Assets (liabilities) at June 30, 2016:
Measured on a recurring basis:
ARO Trust investments	$	87		$	87		$	87		$	—		$	—
Energy derivatives assets designated as hedging instruments	1			1			—			1			—
Energy derivatives assets not designated as hedging instruments	1			1			—			—			1
Energy derivatives liabilities not designated as hedging instruments	(6		)	(6		)	(1		)	—			(5		)
Additional disclosures:
Other receivables	13			13			13			—			—
Long-term debt, including current portion (1)	(19,900		)	(19,478		)	—			(19,478		)	—

Assets (liabilities) at December 31, 2015:
Measured on a recurring basis:
ARO Trust investments	$	67		$	67		$	67		$	—		$	—
Energy derivatives assets not designated as hedging instruments	5			5			—			3			2
Energy derivatives liabilities not designated as hedging instruments	(2		)	(2		)	—			—			(2		)
Additional disclosures:
Other receivables	12			12			10			2			—
Long-term debt, including current portion (1)	(19,176		)	(15,988		)	—			(15,988		)	—

___________________________________

(1) Excludes capital leases.

Fair Value Methods

We use the following methods and assumptions in estimating the fair value of our financial instruments:

Assets and liabilities measured at fair value on a recurring basis

ARO Trust investments: Transco deposits a portion of its collected rates, pursuant to its rate case settlement, into an external trust (ARO Trust) that is specifically designated to fund future asset retirement obligations (ARO). The ARO Trust invests in a portfolio of actively traded mutual funds that are measured at fair value on a recurring basis based on quoted prices in an active market, is classified as available-for-sale, and is reported in Regulatory assets, deferred charges, and other in the Consolidated Balance Sheet. Both realized and unrealized gains and losses are ultimately recorded as regulatory assets or liabilities.

Energy derivatives: Energy derivatives include commodity based exchange-traded contracts and over-the-counter contracts, which consist of physical forwards, futures, and swaps that are measured at fair value on a recurring basis. The fair value amounts are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under the terms of our master netting arrangements. Further, the amounts do not include cash held on deposit in margin

Notes (Continued)

accounts that we have received or remitted to collateralize certain derivative positions. Energy derivatives assets are reported in Other current assets and Regulatory assets, deferred charges, and other in the Consolidated Balance Sheet. Energy derivatives liabilities are reported in Other accrued liabilities and Regulatory liabilities, deferred income, and other in the Consolidated Balance Sheet.

Reclassifications of fair value between Level 1, Level 2, and Level 3 of the fair value hierarchy, if applicable, are made at the end of each quarter. No transfers between Level 1 and Level 2 occurred during the six months ended June 30, 2016 or 2015.

Additional fair value disclosures

Other receivables: Other receivables primarily consists of margin deposits, which are reported in Other current assets in the Consolidated Balance Sheet. The disclosed fair value of our margin deposits is considered to approximate the carrying value generally due to the short-term nature of these items.

Long-term debt: The disclosed fair value of our long-term debt is determined by a market approach using broker quoted indicative period-end bond prices. The quoted prices are based on observable transactions in less active markets for our debt or similar instruments.

Nonrecurring fair value measurements

The following table presents impairments associated with certain nonrecurring fair value measurements within Level 3 of the fair value hierarchy.



						Impairments
						Six Months Ended June 30,
	Classification	Segment	Date of Measurement	Fair Value		2016		2015
				(Millions)
Surplus equipment (1)	Property, plant, and equipment – net	Northeast G&P	June 30, 2015	$	17			$	20
Canadian operations (2)	Assets held for sale	NGL & Petchem Services	June 30, 2016	924		$	341
Certain gathering operations (3)	Property, plant, and equipment – net	Central	June 30, 2016	18		48
Level 3 fair value measurements of long-lived assets						389		20
Other impairments (4)						13		7
Impairment of long-lived assets						$	402	$	27

Equity-method investments (5)	Investments	Central and Northeast G&P	March 31, 2016	$	1,294	$	109
Other equity-method investment	Investments	Central	March 31, 2016	—		3
Impairment of equity-method investments						$	112

______________


(1)	Relates to certain surplus equipment. The estimated fair value was determined by a market approach based on our analysis of observable inputs in the principal market.


(2)	We have previously announced that our business plan for 2016 includes the expectation of proceeds from planned asset sales and we initiated a marketing process regarding the potential sale of our Canadian operations (disposal group). These assets are being marketed along with other Canadian operations held by Williams. We have received

Notes (Continued)

bids during the second quarter from potential purchasers and are in advanced negotiations regarding the sale of these operations. Given the maturation of this process during the second quarter, we have designated these operations as held for sale as of June 30, 2016. As a result, we measured the fair value of the disposal group, resulting in an impairment charge. The estimated fair value was determined by a market approach based primarily on inputs received in the marketing process and reflects our estimate of the potential assumed proceeds related to our Canadian operations. We expect to dispose of our Canadian operations through a sale during the second half of 2016. The following table presents the carrying amounts of the major classes of assets and liabilities included as part of the disposal group, which are presented within Assets held for sale and Liabilities held for sale on the Consolidated Balance Sheet (and excludes certain insignificant assets held for sale at Central that are not part of this disposal group).



	Carrying Amount
	June 30, 2016
	(Millions)
Assets (liabilities):
Current assets	$	35
Property, plant, and equipment – net	1,122
Other noncurrent assets	108
Impairment of disposal group	(341		)
	$	924

Current liabilities	(23		)
Noncurrent liabilities	(128		)
	$	(151	)

The following table presents the results of operations for the disposal group, excluding the impairment noted above.



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(Millions)
Income (loss) before income taxes of disposal group	$	(10	)	$	(8	)	$	(25	)	$	3


(3)	Relates to the certain gathering assets within the Mid-Continent region. The estimated fair value was determined by a market approach based on our analysis of observable inputs in the principal market.


(4)	Reflects multiple individually insignificant impairments of other certain assets that may no longer be in use or are surplus in nature for which the fair value was determined to be zero or an insignificant salvage value.

(5)

Relates to Central’s equity-method investment in the Delaware basin gas gathering system and Northeast G&P’s equity-method investment in Laurel Mountain. Our carrying values in these equity-method investments had been written down to fair value at December 31, 2015. Our first-quarter 2016 analysis reflected higher discount rates for both of these investments, along with lower natural gas prices for Laurel Mountain. We estimated the fair value of these investments using an income approach based on expected future cash flows and appropriate discount rates. The determination of estimated future cash flows involved significant assumptions regarding gathering volumes and related capital spending. Discount rates utilized ranged from 13.0 percent to 13.3 percent and reflected increases in our cost of capital, revised estimates of expected future cash flows, and risks associated with the underlying businesses.

Notes (Continued)

Guarantees

We are required by our revolving credit agreements to indemnify lenders for certain taxes required to be withheld from payments due to the lenders and for certain tax payments made by the lenders. The maximum potential amount of future payments under these indemnifications is based on the related borrowings and such future payments cannot currently be determined. These indemnifications generally continue indefinitely unless limited by the underlying tax regulations and have no carrying value. We have never been called upon to perform under these indemnifications and have no current expectation of a future claim.

Note 10 – Contingent Liabilities

Environmental Matters

We are a participant in certain environmental activities in various stages including assessment studies, cleanup operations, and remedial processes at certain sites, some of which we currently do not own. We are monitoring these sites in a coordinated effort with other potentially responsible parties, the U.S. Environmental Protection Agency (EPA), and other governmental authorities. We are jointly and severally liable along with unrelated third parties in some of these activities and solely responsible in others. Certain of our subsidiaries have been identified as potentially responsible parties at various Superfund and state waste disposal sites. In addition, these subsidiaries have incurred, or are alleged to have incurred, various other hazardous materials removal or remediation obligations under environmental laws. As of June 30, 2016, we have accrued liabilities totaling $13 million for these matters, as discussed below. Our accrual reflects the most likely costs of cleanup, which are generally based on completed assessment studies, preliminary results of studies, or our experience with other similar cleanup operations. Certain assessment studies are still in process for which the ultimate outcome may yield significantly different estimates of most likely costs. Any incremental amount in excess of amounts currently accrued cannot be reasonably estimated at this time due to uncertainty about the actual number of contaminated sites ultimately identified, the actual amount and extent of contamination discovered, and the final cleanup standards mandated by the EPA and other governmental authorities.

The EPA and various state regulatory agencies routinely promulgate and propose new rules, and issue updated guidance to existing rules. More recent rules and rulemakings include, but are not limited to, rules for reciprocating internal combustion engine maximum achievable control technology, new air quality standards for one hour nitrogen dioxide emissions, and volatile organic compound and methane new source performance standards impacting design and operation of storage vessels, pressure valves, and compressors. On October 1, 2015, the EPA issued its new rule regarding National Ambient Air Quality Standards for ground-level ozone, setting a new standard of 70 parts per billion. We are monitoring the rule’s implementation and evaluating potential impacts to our operations. For these and other new regulations, we are unable to estimate the costs of asset additions or modifications necessary to comply due to uncertainty created by the various legal challenges to these regulations and the need for further specific regulatory guidance.

Our interstate gas pipelines are involved in remediation activities related to certain facilities and locations for polychlorinated biphenyls, mercury, and other hazardous substances. These activities have involved the EPA and various state environmental authorities, resulting in our identification as a potentially responsible party at various Superfund waste sites. At June 30, 2016, we have accrued liabilities of $6 million for these costs. We expect that these costs will be recoverable through rates.

We also accrue environmental remediation costs for natural gas underground storage facilities, primarily related to soil and groundwater contamination. At June 30, 2016, we have accrued liabilities totaling $7 million for these costs.

Geismar Incident

On June 13, 2013, an explosion and fire occurred at our Geismar olefins plant and rendered the facility temporarily inoperable. We are addressing the following matters in connection with the Geismar Incident.

On October 21, 2013, the EPA issued an Inspection Report pursuant to the Clean Air Act’s Risk Management Program following its inspection of the facility on June 24 through June 28, 2013. The report notes the EPA’s preliminary determinations about the facility’s documentation regarding process safety, process hazard analysis, as well as operating

Notes (Continued)

procedures, employee training, and other matters. On June 16, 2014, we received a request for information related to the Geismar Incident from the EPA under Section 114 of the Clean Air Act to which we responded on August 13, 2014. The EPA could issue penalties pertaining to final determinations.

Multiple lawsuits, including class actions for alleged offsite impacts, property damage, customer claims, and personal injury, have been filed against us. To date, we have settled certain of the personal injury claims for an aggregate immaterial amount that we have recovered from our insurers. The trial for certain plaintiffs claiming personal injury, that was set to begin on June 15, 2015, in Iberville Parish, Louisiana, has been postponed to September 6, 2016. The court also set trial dates for additional plaintiffs in November 2016 and January and April 2017. We believe it is probable that additional losses will be incurred on some lawsuits, while for others we believe it is only reasonably possible that losses will be incurred. However, due to ongoing litigation involving defenses to liability, the number of individual plaintiffs, limited information as to the nature and extent of all plaintiffs’ damages, and the ultimate outcome of all appeals, we are unable to reliably estimate any such losses at this time. We believe that it is probable that any ultimate losses incurred will be covered by our general liability insurance policy, which has an aggregate limit of $610 million applicable to this event and retention (deductible) of $2 million per occurrence.

Royalty Matters

Certain of our customers, including one major customer, have been named in various lawsuits alleging underpayment of royalties and claiming, among other things, violations of anti-trust laws and the Racketeer Influenced and Corrupt Organizations Act. We have also been named as a defendant in certain of these cases in Texas, Pennsylvania, and Ohio based on allegations that we improperly participated with that major customer in causing the alleged royalty underpayments. We have also received subpoenas from the United States Department of Justice and the Pennsylvania Attorney General requesting documents relating to the agreements between us and our major customer and calculations of the major customer’s royalty payments. On December 9, 2015, the Pennsylvania Attorney General filed a civil suit against one of our major customers and us alleging breaches of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, and on February 8, 2016, the Pennsylvania Attorney General filed an amended complaint in such civil suit, which omitted us as a party. We believe that the claims asserted are subject to indemnity obligations owed to us by that major customer. Our customer and the plaintiffs in those certain Texas cases in which we are named have reached a settlement, and therefore all claims asserted against us in the Texas cases are being fully dismissed with prejudice. Due to the preliminary status of the remaining cases, we are unable to estimate a range of potential loss at this time.

Stockholder Litigation

On March 7, 2016, a purported unitholder of us filed a putative class action on behalf of certain purchasers of our units in the U.S. District Court in Oklahoma. The action names as defendants, us, Williams, Williams Partners GP LLC, Alan S. Armstrong, and Donald R. Chappel and alleges violations of certain federal securities laws for failure to disclose Energy Transfer’s intention to pursue a purchase of Williams conditioned on Williams not closing the WPZ Public Unit Exchange when announcing the WPZ Public Unit Exchange. The complaint seeks, among other things, damages and an award of costs and attorneys’ fees. The plaintiff must file an amended complaint by August 31, 2016. We cannot reasonably estimate a range of potential loss at this time.

Opal 2014 Incident Subpoena

On July 14, 2016, our subsidiary, Williams Field Services Company, LLC (WFS), received a grand jury subpoena from the U.S. District Court for the District of Wyoming. The subpoena requests documents and information from WFS relating to, among other things, the April 23, 2014, explosion and fire at its natural gas processing facility in Lincoln County, Wyoming, near the town of Opal. We and WFS intend to cooperate fully with this investigation. It is not possible at this time to predict the outcome of this investigation, including whether the investigation will result in any action or proceeding against WFS, or to reasonably estimate any potential loss related thereto. We currently believe that this matter will not have a material adverse effect on our consolidated results of operations, financial position, or liquidity.

Other

In addition to the foregoing, various other proceedings are pending against us which are incidental to our operations.

Notes (Continued)

Summary

We have disclosed all significant matters for which we are unable to reasonably estimate a range of possible loss. We estimate that for all other matters for which we are able to reasonably estimate a range of loss, our aggregate reasonably possible losses beyond amounts accrued are immaterial to our expected future annual results of operations, liquidity, and financial position. These calculations have been made without consideration of any potential recovery from third parties.

Note 11 – Segment Disclosures

Our reportable segments are Central, Northeast G&P, Atlantic-Gulf, West, and NGL & Petchem Services. (See Note 1 – General, Description of Business, and Basis of Presentation.)

Performance Measurement

We evaluate segment operating performance based upon Modified EBITDA (earnings before interest, taxes, depreciation, and amortization). This measure represents the basis of our internal financial reporting and is the primary performance measure used by our chief operating decision maker in measuring performance and allocating resources among our reportable segments.

We define Modified EBITDA as follows:


•	Net income (loss) before:


◦	Provision (benefit) for income taxes;


◦	Interest incurred, net of interest capitalized;


◦	Equity earnings (losses);


◦	Impairment of equity-method investments;


◦	Other investing income (loss) – net;


◦	Impairment of goodwill;


◦	Depreciation and amortization expenses;


◦	Accretion expense associated with asset retirement obligations for nonregulated operations.


•	This measure is further adjusted to include our proportionate share (based on ownership interest) of Modified EBITDA from our equity-method investments calculated consistently with the definition described above.

Notes (Continued)

The following table reflects the reconciliation of Segment revenues to Total revenues as reported in the Consolidated Statement of Comprehensive Income (Loss).



	Central		Northeast G&P		Atlantic- Gulf		West		NGL & Petchem Services		Eliminations			Total
	(Millions)
Three Months Ended June 30, 2016
Segment revenues:
Service revenues
External	$	255	$	199	$	447	$	255	$	54	$	—		$	1,210
Internal	3		9		1		—		—		(13		)	—
Total service revenues	258		208		448		255		54		(13		)	1,210
Product sales
External	—		27		63		4		426		—			520
Internal	—		6		42		74		37		(159		)	—
Total product sales	—		33		105		78		463		(159		)	520
Total revenues	$	258	$	241	$	553	$	333	$	517	$	(172	)	$	1,730

Three Months Ended June 30, 2015
Segment revenues:
Service revenues
External	$	260	$	214	$	465	$	258	$	34	$	—		$	1,231
Internal	5		2		1		—		—		(8		)	—
Total service revenues	265		216		466		258		34		(8		)	1,231
Product sales
External	—		30		83		8		478		—			599
Internal	—		5		42		60		35		(142		)	—
Total product sales	—		35		125		68		513		(142		)	599
Total revenues	$	265	$	251	$	591	$	326	$	547	$	(150	)	$	1,830

Six Months Ended June 30, 2016
Segment revenues:
Service revenues
External	$	507	$	407	$	912	$	518	$	92	$	—		$	2,436
Internal	6		12		2		—		—		(20		)	—
Total service revenues	513		419		914		518		92		(20		)	2,436
Product sales
External	—		46		100		8		794		—			948
Internal	—		11		74		122		75		(282		)	—
Total product sales	—		57		174		130		869		(282		)	948
Total revenues	$	513	$	476	$	1,088	$	648	$	961	$	(302	)	$	3,384

Six Months Ended June 30, 2015
Segment revenues:
Service revenues
External	$	505	$	410	$	922	$	520	$	66	$	—		$	2,423
Internal	12		2		2		—		—		(16		)	—
Total service revenues	517		412		924		520		66		(16		)	2,423
Product sales
External	—		67		151		16		884		—			1,118
Internal	—		6		95		116		72		(289		)	—
Total product sales	—		73		246		132		956		(289		)	1,118
Total revenues	$	517	$	485	$	1,170	$	652	$	1,022	$	(305	)	$	3,541

Notes (Continued)

The following table reflects the reconciliation of Modified EBITDA to Net income (loss) as reported in the Consolidated Statement of Comprehensive Income (Loss).



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(Millions)
Modified EBITDA by segment:
Central	$	134		$	160		$	291		$	293
Northeast G&P	216			183			430			368
Atlantic-Gulf	357			389			733			724
West	158			150			313			311
NGL & Petchem Services	(261		)	158			(208		)	164
Other	—			13			—			10
	604			1,053			1,559			1,870
Accretion expense associated with asset retirement obligations for nonregulated operations	(9		)	(9		)	(16		)	(16		)
Depreciation and amortization expenses	(432		)	(419		)	(867		)	(838		)
Equity earnings (losses)	101			93			198			144
Impairment of equity-method investments	—			—			(112		)	—
Other investing income (loss) – net	1			—			1			1
Proportional Modified EBITDA of equity-method investments	(191		)	(183		)	(380		)	(319		)
Interest expense	(231		)	(203		)	(460		)	(395		)
(Provision) benefit for income taxes	80			—			79			(3		)
Net income (loss)	$	(77	)	$	332		$	2		$	444

The following table reflects Total assets by reportable segment.



	Total Assets
	June 30, 2016			December 31, 2015
	(Millions)
Central	$	13,368		$	13,914
Northeast G&P	13,636			13,827
Atlantic-Gulf	13,269			12,171
West	4,771			5,035
NGL & Petchem Services	3,134			3,306
Other corporate assets	115			350
Eliminations (1)	(999		)	(733		)
Total	$	47,294		$	47,870


(1)	Eliminations primarily relate to the intercompany accounts and notes receivable generated by our cash management program.

Item 2

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

General

We are an energy infrastructure master limited partnership focused on connecting North America’s significant hydrocarbon resource plays to growing markets for natural gas, NGLs, and olefins through our gas pipeline and midstream businesses. WPZ GP LLC, a Delaware limited liability company wholly owned by Williams, is our general partner.

Our interstate natural gas pipeline strategy is to create value by maximizing the utilization of our pipeline capacity by providing high quality, low cost transportation of natural gas to large and growing markets. Our gas pipeline businesses’ interstate transmission and storage activities are subject to regulation by the FERC and as such, our rates and charges for the transportation of natural gas in interstate commerce, and the extension, expansion or abandonment of jurisdictional facilities and accounting, among other things, are subject to regulation. The rates are established through the FERC’s ratemaking process. Changes in commodity prices and volumes transported have limited near-term impact on these revenues because the majority of cost of service is recovered through firm capacity reservation charges in transportation rates.

The ongoing strategy of our midstream operations is to safely and reliably operate large-scale midstream infrastructure where our assets can be fully utilized and drive low per-unit costs. We focus on consistently attracting new business by providing highly reliable service to our customers. These services include natural gas gathering, processing, treating, and compression, NGL fractionation and transportation, crude oil production handling and transportation, olefin production, marketing services for NGL, oil and natural gas, as well as storage facilities.

Effective January 1, 2016, businesses located in the Marcellus and Utica shale plays within the former Access Midstream segment are now managed, and thus presented, within the Northeast G&P segment. The remaining Access Midstream businesses are now presented as the Central segment. Prior period segment disclosures have been recast for these segment changes. As a result, beginning with the reporting of first-quarter 2016, our reportable segments are Central, Northeast G&P, Atlantic-Gulf, West, and NGL & Petchem Services, which are comprised of the following businesses:

•

Central provides domestic gathering, treating, and compression services to producers under long-term, fixed-fee contracts. Its primary operating areas are in the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of south Texas, the Haynesville Shale region of northwest Louisiana, and the Mid-Continent region which includes the Anadarko, Arkoma, Delaware and Permian basins. Central also includes a 50 percent equity-method investment in the Delaware basin gas gathering system in the Mid-Continent region.

•

Northeast G&P is comprised of midstream gathering and processing businesses in the Marcellus Shale region primarily in Pennsylvania, New York, and West Virginia, and the Utica shale region of eastern Ohio, as well as a 69 percent equity-method investment in Laurel Mountain and a 58 percent equity-method investment in Caiman II. Northeast G&P also includes a 62 percent equity-method investment in UEOM and Appalachia Midstream Services, LLC, which owns equity-method investments with an approximate average 45 percent interest in multiple gas gathering systems in the Marcellus Shale (Appalachia Midstream Investments).

•

Atlantic-Gulf is comprised of our interstate natural gas pipeline, Transco, and significant natural gas gathering and processing and crude oil production handling and transportation assets in the Gulf Coast region, including a 51 percent interest in Gulfstar One (a consolidated entity), which is a proprietary floating production system, as well as a 50 percent equity-method investment in Gulfstream, a 60 percent equity-method investment in Discovery, and a 41 percent interest in Constitution (a consolidated entity), which is under development.

Management’s Discussion and Analysis (Continued)


•	West is comprised of our gathering, processing and treating operations in New Mexico, Colorado, and Wyoming, and our interstate natural gas pipeline, Northwest Pipeline.

•

NGL & Petchem Services is comprised of our 88.5 percent undivided interest in an olefins production facility in Geismar, Louisiana, along with a refinery grade propylene splitter and various petrochemical and feedstock pipelines in the Gulf Coast region, an oil sands offgas processing plant near Fort McMurray, Alberta, and an NGL/olefin fractionation facility at Redwater, Alberta. As of June 30, 2016, these Canadian operations are considered held for sale (See Note 9 – Fair Value Measurements and Guarantees of Notes to Consolidated Financial Statements). This segment also includes an NGL and natural gas marketing business, storage facilities, and an undivided 50 percent interest in an NGL fractionator near Conway, Kansas, and a 50 percent equity-method investment in OPPL.

As of June 30, 2016, Williams holds an approximate 60 percent interest in us, comprised of an approximate 58 percent limited partner interest and all of our 2 percent general partner interest and IDRs.

Unless indicated otherwise, the following discussion and analysis of results of operations and financial condition and liquidity should be read in conjunction with the consolidated financial statements and notes thereto of this Form 10‑Q and our annual consolidated financial statements and notes thereto in Exhibit 99.1 of our Form 8‑K dated May 27, 2016.

Distributions

On July 26, 2016, our general partner’s Board of Directors approved a quarterly distribution to unitholders of $0.85 per common unit on August 12, 2016, on our outstanding common units to unitholders of record at the close of business on August 5, 2016.

Overview of Six Months Ended June 30, 2016

Net income (loss) attributable to controlling interests for the six months ended June 30, 2016, decreased $429 million compared to the six months ended June 30, 2015, reflecting impairment charges associated with certain equity-method investments and long-lived assets, the absence of $126 million of insurance recoveries, increased depreciation and amortization expense primarily due to depreciation on new projects placed in service and higher interest incurred, partially offset by an increase in olefins margins associated with our Geismar plant and higher equity earnings at Discovery related to the completion of the Keathley Canyon Connector in 2015. See additional discussion in Results of Operations.

Williams’ Merger Agreement with Energy Transfer

On September 28, 2015, Williams publicly announced in a press release that it had entered into a Merger Agreement with Energy Transfer and certain of its affiliates. The Merger Agreement provided that, subject to the satisfaction of customary closing conditions, Williams would merge with and into the newly formed ETC, with ETC surviving the ETC Merger. Energy Transfer formed ETC as a limited partnership that would be treated as a corporation for U.S. federal income tax purposes. Immediately following the completion of the ETC Merger, ETC would contribute to Energy Transfer all of the assets and liabilities of Williams in exchange for the issuance by Energy Transfer to ETC of a number of Energy Transfer Class E common units equal to the number of ETC common shares issued to Williams stockholders in the ETC Merger.

On June 29, 2016, Energy Transfer provided Williams written notice terminating the Merger Agreement, citing the alleged failure of certain conditions under the Merger Agreement.

NGL & Petchem Services

Redwater expansion

In March 2016, we completed the expansion of our Redwater facilities to provide NGL transportation and fractionation services to Williams associated with its long-term agreement to provide gas processing services to a second

Management’s Discussion and Analysis (Continued)

bitumen upgrader in Canada’s oil sands near Fort McMurray, Alberta. With this capacity increase, additional NGL/olefins mixtures from Williams are fractionated into an ethane/ethylene mix, propane, polymer grade propylene, normal butane, an alkylation feed and condensate under a long-term, fee-based agreement.

Volatile Commodity Prices

NGL per-unit margins were approximately 24 percent lower in the first six months of 2016 compared to the same period of 2015. The primary drivers for the six-month comparative period decrease was a 17 percent decline in per-unit non-ethane prices and to a change in the relative mix of NGL products produced, which has shifted to a higher proportion of lower-margin ethane products. The decrease in per-unit non-ethane prices was partially offset by an approximately 30 percent decline in per-unit natural gas feedstock prices. NGL per-unit margins were approximately 29 percent higher for the quarter ending June 30, 2016, compared to the quarter ending March 31, 2016. The improvement in NGL per-unit margins between the second and first quarter of 2016 was due to a 39 percent improvement in non-ethane prices in the quarter ending June 30, 2016, compared to the quarter ending March 31, 2016.

NGL margins are defined as NGL revenues less any applicable Btu replacement cost, plant fuel, and third-party transportation and fractionation. Per-unit NGL margins are calculated based on sales of our own equity volumes at the processing plants. Our equity volumes include NGLs where we own the rights to the value from NGLs recovered at our plants under both “keep-whole” processing agreements, where we have the obligation to replace the lost heating value with natural gas, and “percent-of-liquids” agreements whereby we receive a portion of the extracted liquids with no obligation to replace the lost heating value.

The following graph illustrates the effects of margin volatility and NGL production and sales volumes, as well as the margin differential between ethane and non-ethane products and the relative mix of those products.

The potential impact of commodity price volatility on our business for the remainder of 2016 is further discussed in the following Company Outlook.

Management’s Discussion and Analysis (Continued)

Company Outlook

Our strategy is to provide large-scale energy infrastructure designed to maximize the opportunities created by the vast supply of natural gas and natural gas products that exists in North America. We seek to accomplish this through further developing our scale positions in current key markets and basins and entering new demand driven growth markets and basins where we can become the large-scale service provider. We will continue to maintain a strong commitment to safety, environmental stewardship, operational excellence, and customer satisfaction. We believe that accomplishing these goals will position us to deliver safe and reliable service to our customers and an attractive return to our unitholders.

We expect commodity prices to remain challenged and costs of capital to remain sharply higher for the remainder of 2016 as compared to 2015. Anticipating these conditions, our business plan for 2016 includes significant reductions in capital investment and expenses, including the workforce reductions previously discussed in Note 5 – Other Income and Expenses of Notes to Consolidated Financial Statements, from our previous plans. In addition, we expect proceeds from the planned sale of our Canadian operations during 2016.

Our growth capital and investment expenditures in 2016 are expected to total $1.9 billion. Approximately $1.3 billion of our growth capital funding needs include Transco expansions and other interstate pipeline growth projects, most of which are fully contracted with firm transportation agreements. The remaining non-interstate pipeline growth capital spending in 2016 primarily reflects investment in gathering and processing systems limited to known new producer volumes, including volumes that support Transco expansion projects in addition to wells drilled and completed awaiting connecting infrastructure. We also remain committed to projects that maintain our assets for safe and reliable operations, as well as projects that meet legal, regulatory, and/or contractual commitments.

As previously discussed, we have announced a quarterly distribution of $0.85 per common unit, or $3.40 annually. Additionally, we expect to implement a distribution reinvestment program (DRIP). The program is expected to enhance our ability to maintain our distribution, while providing us with the flexibility to reduce debt and maintain our investment grade ratings.

Fee-based businesses are a significant component of our portfolio and serve to somewhat reduce the influence of commodity price fluctuations on our operating results and cash flows. However, producer activities are being impacted by lower energy commodity prices, which are affecting our gathering volumes. The credit profiles of certain of our producer customers are increasingly challenged by the current market conditions. These conditions may ultimately result in a further reduction of our gathering volumes. Such reductions as well as further or prolonged declines in energy commodity prices may also result in noncash impairments of our assets.

We have been approached by certain customers seeking to revise certain of our gathering and processing contracts, due in part to the low energy commodity price environment. In these situations, we generally seek to reasonably consider customer needs while maintaining or improving the overall value of our contracts. Any such revisions may impact the level and timing of expected future cash flows, requiring that we evaluate the recoverability of the underlying assets, which could result in noncash impairments.

Commodity margins are highly dependent upon regional supply/demand balances of natural gas as they relate to NGL margins, while olefins are impacted by global supply and demand fundamentals. We anticipate the following trends in energy commodity prices in 2016, compared to 2015 that may impact our operating results and cash flows:


•	Natural gas prices are expected to be lower;


•	NGL prices are expected to be somewhat consistent;


•	Olefins prices, including propylene, ethylene, and the overall ethylene crack spread, are expected to be lower.

In 2016, we anticipate our operating results will include increases from our fee-based businesses placed in service in 2015 and those anticipated to be placed in service in 2016, increases in our olefins volumes associated with a full year of operations at our Geismar plant following its 2015 repair and expansion, and lower operating and general and administrative expenses associated with cost reduction initiatives.

Management’s Discussion and Analysis (Continued)

Potential risks and obstacles that could impact the execution of our plan include:


•	Downgrade of our investment grade credit ratings and associated increase in cost of borrowings;


•	Higher cost of capital and/or limited availability of capital due to a change in our financial condition, interest rates, and/or market or industry conditions;


•	Counterparty credit and performance risk, including that of Chesapeake Energy Corporation and its affiliates;


•	Lower than anticipated proceeds from planned asset sales;


•	Lower than anticipated energy commodity prices and margins;


•	Lower than anticipated volumes from third parties served by our midstream business;


•	Unexpected significant increases in capital expenditures or delays in capital project execution;


•	Changes in the political and regulatory environments including the risk of delay in permits needed for regulatory projects;


•	Unexpected delay or inability to execute the DRIP;


•	General economic, financial markets, or further industry downturn;


•	Lower than expected levels of cash flow from operations;


•	Physical damages to facilities, including damage to offshore facilities by named windstorms;


•	Reduced availability of insurance coverage.

We continue to address these risks through maintaining a strong financial position and liquidity, as well as through managing a diversified portfolio of energy infrastructure assets which continue to serve key markets and basins in North America.

Expansion Projects

Our ongoing major expansion projects include the following:

Central

Eagle Ford

We plan to expand our gathering infrastructure in the Eagle Ford region in order to meet our customers’ production plans. The expansion of the gathering infrastructure includes the addition of new facilities, well connections, and gathering pipeline to the existing systems.

Northeast G&P

Oak Grove Expansion

We plan to expand our processing capacity at our Oak Grove facility by adding a second 200 MMcf/d cryogenic natural gas processing plant, which, based on our customers’ needs, is expected to be placed into service in 2020.

Management’s Discussion and Analysis (Continued)

Gathering System Expansion

We will continue to expand the gathering systems in the Marcellus and Utica shale regions that are needed to meet our customers’ production plans. The expansion of the gathering infrastructure includes additional compression and gathering pipeline to the existing system.

Atlantic-Gulf

Constitution Pipeline

In December 2014, we received approval from the FERC to construct and operate the jointly owned Constitution pipeline, which will have an expected capacity of 650 Mdth/d. However, in April 2016, the New York State Department of Environmental Conservation (NYSDEC) denied a necessary water quality certification for the New York portion of the pipeline. We remain steadfastly committed to the project, and in May 2016, Constitution appealed the NYSDEC’s denial of the certification and filed an action in federal court seeking a declaration that the State of New York’s authority to exercise permitting jurisdiction over certain other environmental matters is preempted by federal law. (See Note 2 - Variable Interest Entities of Notes to Consolidated Financial Statments.) We currently own 41 percent of Constitution with three other parties holding 25 percent, 24 percent, and 10 percent, respectively. We will be the operator of Constitution. The 126-mile Constitution pipeline will connect our gathering system in Susquehanna County, Pennsylvania, to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in New York, as well as to a local distribution company serving New York and Pennsylvania. In light of the NYSDEC’s denial of the water quality certification and the actions taken to challenge the decision, the target in-service date has been revised to as early as the second half of 2018, which assumes that the legal challenge process is satisfactorily and promptly concluded.

Garden State

In April 2016, we received approval from the FERC to expand Transco’s existing natural gas transmission system to provide incremental firm transportation capacity from Station 210 in New Jersey to a new interconnection on our Trenton Woodbury Lateral in New Jersey. The project will be constructed in phases and is expected to increase capacity by 180 Mdth/d. We plan to place the initial phase of the project into service during the first half of 2017 and the remaining portion in the fourth quarter of 2017, assuming timely receipt of all necessary regulatory approvals.

Norphlet Project

In March 2016, we announced that we have reached an agreement to provide deepwater gas gathering services to the Appomattox development in the Gulf of Mexico. The project will provide offshore gas gathering services to our existing Transco lateral, which will provide transmission services onshore to our Mobile Bay processing facility. We also plan to make modifications to our Main Pass 261 Platform to install an alternate delivery route from the platform, as well as modifications to our Mobile Bay processing facility. The project is scheduled to go into service during the fourth quarter of 2019.

Hillabee

In February 2016, the FERC issued a certificate order for the initial phases of Transco’s Hillabee Expansion Project (Hillabee). The project involves an expansion of Transco’s existing natural gas transmission system from Station 85 in west central Alabama to a proposed new interconnection with the Sabal Trail project in Alabama. Hillabee will be constructed in phases, and all of the project expansion capacity will be leased to Sabal Trail. We plan to place the initial phases of Hillabee into service as early as the second quarter of 2017 and during the second quarter of 2020, assuming timely receipt of all necessary regulatory approvals, and together they are expected to increase capacity by 1,025 Mdth/d.

In March 2016, we entered into an agreement with the member-sponsors of Sabal Trail to resolve several matters. In accordance with the agreement, the member-sponsors will pay us an aggregate amount of $240 million in three equal installments as certain milestones of the project are met. The first $80 million payment was received

Management’s Discussion and Analysis (Continued)

in March 2016. We expect to recognize income associated with these receipts over the term of the capacity lease agreement.

Gulf Trace

In October 2015, we received approval from the FERC to expand Transco’s existing natural gas transmission system together with greenfield facilities to provide incremental firm transportation capacity from Station 65 in St. Helena Parish, Louisiana to a new interconnection with Sabine Pass Liquefaction in Cameron Parish, Louisiana. We plan to place the project into service during the first quarter of 2017 and it is expected to increase capacity by 1,200 Mdth/d.

New York Bay Expansion

In July 2016, we received approval from the FERC to expand Transco’s existing natural gas transmission system to provide incremental firm transportation capacity from Pennsylvania to the Rockaway Delivery Lateral transfer point and the Narrows meter station in Richmond County, New York. We plan to place the project into service during the fourth quarter of 2017, assuming timely receipt of all necessary regulatory approvals, and it is expected to increase capacity by 115 Mdth/d.

Rock Springs

In March 2015, we received approval from the FERC to expand Transco’s existing natural gas transmission system from New Jersey to a proposed generation facility in Maryland. We placed the project into service on August 1, 2016 and it increased capacity by 192 Mdth/d.

Atlantic Sunrise

In March 2015, we filed an application with the FERC to expand Transco’s existing natural gas transmission system along with greenfield facilities to provide incremental firm transportation capacity from the northeastern Marcellus producing area to markets along Transco’s mainline as far south as Station 85 in west central Alabama. We plan to place the project into service as early as late 2017, assuming timely receipt of all necessary regulatory approvals, and it is expected to increase capacity by 1,700 Mdth/d.

Virginia Southside II

In July 2016, we received approval from the FERC to expand Transco’s existing natural gas transmission system together with greenfield facilities to provide incremental firm transportation capacity from Station 210 in New Jersey and Station 165 in Virginia to a new lateral extending from our Brunswick Lateral in Virginia. We plan to place the project into service during the fourth quarter of 2017, assuming timely receipt of all necessary regulatory approvals, and it is expected to increase capacity by 250 Mdth/d.

Dalton

In March 2015, we filed an application with the FERC to expand Transco’s existing natural gas transmission system together with greenfield facilities to provide incremental firm transportation capacity from Station 210 in New Jersey to markets in northwest Georgia. We plan to place the project into service in 2017, assuming timely receipt of all necessary regulatory approvals, and it is expected to increase capacity by 448 Mdth/d.

Critical Accounting Estimates

Goodwill

During the first quarter of 2016 we observed a significant decline in the market value of WPZ. As a result, we evaluated our goodwill associated with the West G&P reporting unit for impairment. Goodwill for the West G&P reporting unit was $47 million at both June 30, 2016, and December 31, 2015. We estimated the fair value of the West G&P reporting unit based on an income approach utilizing discount rates specific to the underlying business. These discount rates considered variables unique to each business, including equity yields of comparable midstream businesses, expectations for future growth, and customer performance considerations. The weighted-average discount rate utilized

Management’s Discussion and Analysis (Continued)

was 11.6 percent. Our analysis indicated that the fair value of the West G&P reporting unit exceeded its book value by approximately $262 million, or 10 percent, at the end of the first quarter. We estimated that an overall increase in the discount rate utilized of 250 basis points would have resulted in a potential impairment of goodwill for this reporting unit.

We did not perform an interim assessment at the end of the second quarter of 2016 as our weighted-average cost of capital and equity yields of comparable midstream businesses, which drive discount rates, decreased compared to last quarter and no additional indicators of potential impairment were present.

Judgments and assumptions are inherent in our estimates of future cash flows, discount rates, and market measures utilized. The use of alternate judgments and assumptions could result in a different calculation of fair value, which could ultimately result in the recognition of an impairment charge in the consolidated financial statements.

Equity-Method Investments

In response to declining market conditions in the first quarter of 2016, we assessed whether the carrying amounts of certain of our equity-method investments exceeded their fair value. As a result, we recognized other-than-temporary impairment charges of $59 million and $50 million in the first quarter related to our equity-method investments in the Delaware basin gas gathering system (DBJV) and Laurel Mountain (LMM), respectively. Our carrying values in these equity-method investments had been written down to fair value at December 31, 2015. Our first-quarter analysis reflected higher discount rates for both DBJV and LMM, along with lower natural gas prices for LMM.

We estimated the fair value of these investments using an income approach and discount rates ranging from 13.0 percent to 13.3 percent. These discount rates considered variables unique to each business area, including equity yields of comparable midstream businesses, expectations for future growth and customer performance considerations.

We estimated that an overall increase in the discount rates utilized of 50 basis points would have resulted in additional impairment charges on our at-risk equity-method investments of approximately $104 million.

Judgments and assumptions are inherent in our estimates of future cash flows, discount rates, and market measures utilized. The use of alternate judgments and assumptions could result in a different calculation of fair value, which could ultimately result in the recognition of a different impairment charge in the consolidated financial statements.

During second quarter the discount rates decreased significantly and no impairments were recognized.

At June 30, 2016, our Consolidated Balance Sheet includes approximately $7.1 billion of investments that are accounted for under the equity-method of accounting. We evaluate these investments for impairment when events or changes in circumstances indicate, in our management’s judgment, that the carrying value of such investments may have experienced an other-than-temporary decline in value. We continue to monitor our equity-method investments for any indications that the carrying value may have experienced an other-than-temporary decline in value. When evidence of a loss in value has occurred, we compare our estimate of the fair value of the investment to the carrying value of the investment to determine whether an impairment has occurred. We generally estimate the fair value of our investments using an income approach where significant judgments and assumptions include expected future cash flows and the appropriate discount rate. In some cases, we may utilize a form of market approach to estimate the fair value of our investments.

If the estimated fair value is less than the carrying value and we consider the decline in value to be other-than-temporary, the excess of the carrying value over the fair value is recognized in the consolidated financial statements as an impairment charge. Events or changes in circumstances that may be indicative of an other-than-temporary decline in value will vary by investment, but may include:


•	A significant or sustained decline in the market value of an investee;


•	Lower than expected cash distributions from investees;

Management’s Discussion and Analysis (Continued)


•	Significant asset impairments or operating losses recognized by investees;


•	Significant delays in or lack of producer development or significant declines in producer volumes in markets served by investees;


•	Significant delays in or failure to complete significant growth projects of investees.

Constitution Pipeline Capitalized Project Costs

As of June 30, 2016, Property, plant, and equipment, at cost in our Consolidated Balance Sheet includes approximately $389 million of capitalized project costs for Constitution, for which we are the construction manager and own a 41 percent consolidated interest. In December 2014, we received approval from the FERC to construct and operate this jointly owned pipeline. However, in April 2016, the New York State Department of Environmental Conservation (NYSDEC) denied a necessary water quality certification for the New York portion of the Constitution pipeline. We remain steadfastly committed to the project, and in May 2016, Constitution appealed the NYSDEC's denial of the certification and filed an action in federal court seeking a declaration that the State of New York's authority to exercise permitting jurisdiction over certain other environmental matters is preempted by federal law.

As a result of the denial by the NYSDEC, we evaluated the capitalized project costs for impairment as of March 31, 2016, and determined that no impairment was necessary. Our evaluation considered probability-weighted scenarios of undiscounted future net cash flows, including a scenario assuming successful resolution with the NYSDEC and construction of the pipeline, as well as a scenario where the project does not proceed. We continue to monitor the capitalized project costs associated with Constitution for potential impairment.

Long-lived Assets

We evaluate our property, plant, and equipment and other identifiable intangible assets for impairment when events or changes in circumstances indicate, in our judgment, that the carrying value of such assets may not be recoverable. When an indicator of impairment has occurred, we compare our estimate of undiscounted future cash flows attributable to the assets to the carrying value of the assets to determine whether an impairment has occurred and we may apply a probability-weighted approach to consider the likelihood of different cash flow assumptions and possible outcomes including selling in the near term or holding for the remaining estimated useful life. If an impairment of the carrying value has occurred, we determine the amount of the impairment recognized by estimating the fair value of the assets and recording a loss for the amount that the carrying value exceeds the estimated fair value. This evaluation is performed at the lowest level for which separately identifiable cash flows exist.

Also, during the second quarter of 2016, certain Mid-Continent gas gathering systems were assessed for impairment due to a potential disposition of those systems in the future. Based on market observed information for these gas gathering systems, these assets were written down to their fair value. As a result, we recognized a pre-tax impairment of $48 million in the Central segment.

We have previously announced that our business plan for 2016 includes the expectation of proceeds from planned asset sales and we initiated a marketing process regarding the potential sale of our Canadian operations. These assets are being marketed along with other Canadian operations held by Williams. We have received bids during the second quarter from potential purchasers and are in advanced negotiations regarding the sale of these operations. Given the

Management’s Discussion and Analysis (Continued)

maturation of this process during the second quarter, we have designated these operations as held for sale at June 30, 2016 (see Note 9 – Fair Value Measurements and Guarantees of Notes to Consolidated Financial Statements). As a result, we measured the fair value of these assets, resulting in a pre-tax impairment charge of $341 million in our NGL & Petchem Services segment during the second quarter of 2016. The estimated fair value was determined by a market approach based primarily on inputs received in the marketing process and reflects our estimate of the potential assumed proceeds related to our Canadian operations. Future changes to the estimated or ultimate sales proceeds may result in changes to the level of impairments or a gain or loss on the sale.

Management’s Discussion and Analysis (Continued)

Results of Operations

Consolidated Overview

The following table and discussion is a summary of our consolidated results of operations for the three and six months ended June 30, 2016, compared to the three and six months ended June 30, 2015. The results of operations by segment are discussed in further detail following this consolidated overview discussion.



	Three Months Ended June 30,									Six Months Ended June 30,
	2016			2015			$ Change*	% Change*		2016			2015			$ Change*	% Change*
	(Millions)									(Millions)
Revenues:
Service revenues	$	1,210		$	1,231		-21	-2	%	$	2,436		$	2,423		+13	+1	%
Product sales	520			599			-79	-13	%	948			1,118			-170	-15	%
Total revenues	1,730			1,830						3,384			3,541
Costs and expenses:
Product costs	393			494			+101	+20	%	710			957			+247	+26	%
Operating and maintenance expenses	386			431			+45	+10	%	768			811			+43	+5	%
Depreciation and amortization expenses	432			419			-13	-3	%	867			838			-29	-3	%
Selling, general, and administrative expenses	139			164			+25	+15	%	320			357			+37	+10	%
Net insurance recoveries – Geismar Incident	—			(126		)	-126	-100	%	—			(126		)	-126	-100	%
Impairment of long-lived assets	396			24			-372	NM		402			27			-375	NM
Other (income) expense – net	24			14			-10	-71	%	48			28			-20	-71	%
Total costs and expenses	1,770			1,420						3,115			2,892
Operating income (loss)	(40		)	410						269			649
Equity earnings (losses)	101			93			+8	+9	%	198			144			+54	+38	%
Impairment of equity-method investments	—			—			—	—	%	(112		)	—			-112	NM
Other investing income (loss) – net	1			—			+1	NM		1			1			—	—	%
Interest expense	(231		)	(203		)	-28	-14	%	(460		)	(395		)	-65	-16	%
Other income (expense) – net	12			32			-20	-63	%	27			48			-21	-44	%
Income (loss) before income taxes	(157		)	332						(77		)	447
Provision (benefit) for income taxes	(80		)	—			+80	NM		(79		)	3			+82	NM
Net income (loss)	(77		)	332						2			444
Less: Net income attributable to noncontrolling interests	13			32			+19	+59	%	42			55			+13	+24	%
Net income (loss) attributable to controlling interests	$	(90	)	$	300					$	(40	)	$	389


*	+ = Favorable change; - = Unfavorable change; NM = A percentage calculation is not meaningful due to a change in signs, a zero-value denominator, or a percentage change greater than 200.

Management’s Discussion and Analysis (Continued)

Three months ended June 30, 2016 vs. three months ended June 30, 2015

Service revenues declined primarily due to a decrease at Gulfstar One related to lower volumes, including the impact of suspending operations in order to facilitate the tie-in of the Gunflint expansion, and lower fee revenues in Ohio Valley Midstream primarily due to continued producer shut-ins and lower rates. These decreases were partially offset by an increase in Transco’s natural gas transportation fee revenues primarily associated with expansion projects placed in service in 2015 and 2016 and new transportation and fractionation revenue associated with Williams’ Horizon liquids extraction plant that went into service in March 2016.

Product sales decreased due to reduced marketing revenues primarily associated with lower NGL volumes and prices, lower olefin sales, and lower revenues from our equity NGLs primarily due to a decrease in per-unit prices, partially offset by slightly higher volumes. The decrease in olefin sales reflects lower revenues from our RGP Splitter and our Canadian operations, mostly driven by lower volumes due primarily to the shut-down and evacuation of our liquids extraction plant because of the wild fires in the Fort McMurray area during May and June, as well as a longer period of planned maintenance in 2016 and lower per-unit propylene prices at the RGP Splitter. These decreases were partially offset by an increase in olefin sales associated with the Geismar plant operating at higher production levels in 2016.

The decrease in Product costs includes lower marketing purchases primarily due to lower volumes and per-unit costs, lower olefin feedstock purchases, and lower natural gas purchases associated with the production of equity NGLs primarily due to lower natural gas prices, partially offset by higher volumes. The decline in olefin feedstock purchases is primarily due to lower per-unit feedstock costs and lower volumes at our RGP Splitter, partially offset by higher costs at our Geismar plant that has operated at higher production levels in 2016.

Operating and maintenance expenses reflect decreases in primarily labor-related and outside service costs resulting from our first-quarter 2016 workforce reductions and cost containment efforts, as well as the absence of ACMP transition costs recognized in 2015, partially offset by higher general maintenance and pipeline testing at Transco.

Depreciation and amortization expenses increased primarily due to depreciation on new Transco projects placed in service.

Selling, general, and administrative expenses decreased primarily due to lower labor-related costs resulting from our first-quarter 2016 workforce reductions and cost containment efforts, as well as the absence of ACMP transition costs recognized in 2015.

Net insurance recoveries – Geismar Incident decreased reflecting the absence of $126 million of insurance proceeds received in the second quarter of 2015.

Impairment of long-lived assets reflects 2016 impairments of our Canadian operations and certain Mid-Continent assets (see Note 9 – Fair Value Measurements and Guarantees of Notes to Consolidated Financial Statements). Impairments recognized in 2015 relate primarily to surplus equipment write-offs.

Operating income (loss) changed unfavorably primarily related to the impairments of long-lived assets in 2016 and the absence of insurance proceeds received in the second quarter of 2015, partially offset by lower operating and maintenance and general and administrative expenses primarily associated with cost containment efforts.

Interest expense increased due to higher Interest incurred of $24 million primarily attributable to new debt issuances in 2016 and 2015, partially offset by lower interest due to 2015 and 2016 debt retirements. (See Note 8 – Debt and Banking Arrangements of Notes to Consolidated Financial Statements.)

Other (income) expense – net below Operating income (loss) changed unfavorably primarily due to the absence of a $14 million gain on early debt retirement in 2015 and a decrease in allowance for equity funds used during construction (AFUDC) due to decreased spending on Constitution.

Management’s Discussion and Analysis (Continued)

Provision (benefit) for income taxes favorable change includes a foreign tax benefit associated with our Canadian operations. See Note 6 – Provision (Benefit) for Income Taxes of Notes to Consolidated Financial Statements for a discussion of the effective tax rates compared to the federal statutory rate for both periods.

Net income attributable to noncontrolling interests decreased primarily due to the reduction of Gulfstar One earnings.

Six months ended June 30, 2016 vs. six months ended June 30, 2015

Service revenues increased primarily due to expansion projects placed in service in 2015 and 2016, including new transportation and fractionation revenue associated with Williams’ Horizon liquids extraction plant. These increases were partially offset by a decrease related to lower volumes attributable to suspending operations in order to facilitate the tie-in of the Gunflint expansion and a decrease in storage revenues at Transco.

Product sales decreased due to reduced marketing revenues primarily associated with lower prices across most products and lower volumes, as well as a reduction in revenues from our equity NGLs primarily related to a decrease in NGL prices. Partially offsetting these decreases are higher olefin sales from our Geismar plant reflecting increased volumes as a result of the plant operating at higher production levels in 2016, partially offset by lower olefin sales from our RGP Splitter and our Canadian operations associated with lower volumes and per-unit sales prices.

The decrease in Product costs includes lower marketing purchases primarily associated with a decline in per-unit costs across most products and lower volumes, reduced natural gas purchases associated with the production of equity NGLs primarily due to lower natural gas prices, and lower olefin feedstock purchases. The decline in olefin feedstock purchases is primarily associated with lower per-unit per unit feedstock costs and volumes at the RGP Splitter, partially offset by an increase in olefin feedstock purchases at our Geismar plant reflecting increased volumes resulting from higher production levels in 2016.

Operating and maintenance expenses decreased due to lower labor-related and outside service costs resulting from our first-quarter 2016 workforce reductions and cost containment efforts, as well as the absence of ACMP transition-related costs recognized in 2015, partially offset by $14 million of severance and related costs recognized in 2016 associated with workforce reductions and higher general maintenance and pipeline testing at Transco.

Depreciation and amortization expenses increased primarily due to depreciation on new Transco projects placed in service.

Selling, general, and administrative expenses decreased primarily due to the absence of ACMP merger and transition- related costs recognized in 2015 and lower labor-related costs resulting from our first-quarter 2016 workforce reductions and cost containment efforts, partially offset by $11 million of severance and related costs recognized in 2016 associated with workforce reductions.

Net insurance recoveries – Geismar Incident decreased reflecting the absence of $126 million of insurance proceeds received in the second quarter of 2015.

Impairment of long-lived assets reflects 2016 impairments of our Canadian operations and certain Mid-Continent assets. (See Note 9 – Fair Value Measurements and Guarantees of Notes to Consolidated Financial Statements). Impairments recognized in 2015 relate primarily to surplus equipment write-offs.

Other (income) expense – net within Operating income (loss) includes an unfavorable change primarily related to losses incurred on foreign currency transactions and the remeasurement of U.S. dollar denominated current assets and liabilities within our Canadian operations.

Operating income (loss) changed unfavorably primarily due impairments in 2016, the absence of insurance proceeds received in the second quarter of 2015, and higher depreciation expenses related to new projects placed in service. These decreases were partially offset by higher olefin margins related to the Geismar plant operating at higher production levels in 2016, lower costs related to the merger and integration of ACMP, and lower operating and maintenance and general and administrative expenses partly associated with cost containment efforts.

Management’s Discussion and Analysis (Continued)

Equity earnings (losses) changed favorably primarily due to a $26 million increase at Discovery related to the completion of the Keathley Canyon Connector in the first quarter of 2015. Additionally, OPPL increased $10 million, UEOM contributed $9 million, and Laurel Mountain contributed $9 million.

Impairment of equity-method investments reflects first-quarter 2016 impairment charges associated with certain equity-method investments. (See Note 4 – Investing Activities of Notes to Consolidated Financial Statements.)

Interest expense increased due to higher Interest incurred of $55 million primarily attributable to new debt issuances in 2016 and 2015 as well as lower Interest capitalized of $10 million mostly related to construction projects that have been placed into service, partially offset by lower interest due to 2015 and 2016 debt retirements. (See Note 8 – Debt and Banking Arrangements of Notes to Consolidated Financial Statements.)

Net income attributable to noncontrolling interests decreased primarily due to the reduction of Gulfstar One earnings.

Period-Over-Period Operating Results – Segments

We evaluate segment operating performance based upon Modified EBITDA. Note 11 – Segment Disclosures of Notes to Consolidated Financial Statements includes a reconciliation of this non-GAAP measure to Net income (loss). Management uses Modified EBITDA because it is an accepted financial indicator used by investors to compare company performance. In addition, management believes that this measure provides investors an enhanced perspective of the operating performance of our assets. Modified EBITDA should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP.

Central



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(Millions)
Service revenues	$	258		$	265		$	513		$	517

Segment costs and expenses	(88		)	(112		)	(196		)	(239		)
Impairment of long-lived assets	(48		)	(3		)	(47		)	(3		)
Proportional Modified EBITDA of equity-method investments	12			10			21			18
Central Modified EBITDA	$	134		$	160		$	291		$	293

Three months ended June 30, 2016 vs. three months ended June 30, 2015

Modified EBITDA decreased primarily due to a $48 million impairment of certain Mid-Continent gathering assets in 2016, partially offset by a decrease in Segment costs and expenses related to the decrease in labor-related and outside service costs resulting from our first quarter workforce reductions and ongoing cost containment efforts.

Service revenues decreased slightly primarily due to lower volumes in the Barnett and Anadarko areas, partially offset by higher rates and volumes in the Haynesville area primarily attributable to a new contract executed in 2015.

Segment costs and expenses decreased primarily due to a decrease in labor-related and outside service costs resulting from our first quarter workforce reductions and ongoing cost containment efforts, as well as the absence of ACMP

Management’s Discussion and Analysis (Continued)

Merger and transition expenses in 2016.

Impairment of long-lived assets increased primarily due to a $48 million impairment of certain Mid-Continent gathering assets in 2016.

Six months ended June 30, 2016 vs. six months ended June 30, 2015

Modified EBITDA decreased slightly primarily due to a $48 million impairment of certain Mid-Continent gathering assets in 2016, offset by a decrease in Segment costs and expenses related to lower labor-related and outside service costs resulting from our first quarter workforce reductions and ongoing cost containment efforts as well as a decrease in ACMP Merger and transition expenses in 2016.

Segment costs and expenses decreased primarily due to a $38 million decrease in ACMP Merger and transition expenses and lower labor-related and outside service costs resulting from our first quarter workforce reductions and ongoing cost containment efforts.

Impairment of long-lived assets increased primarily due to a $48 million impairment of certain Mid-Continent gathering assets in 2016.

Northeast G&P



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(Millions)
Service revenues	$	208		$	216		$	419		$	412
Product sales	33			35			57			73
Segment revenues	241			251			476			485

Product costs	(34		)	(33		)	(55		)	(70		)
Other segment costs and expenses	(83		)	(108		)	(176		)	(193		)
Impairment of long-lived assets	(4		)	(21		)	(8		)	(24		)
Proportional Modified EBITDA of equity-method investments	96			94			193			170
Northeast G&P Modified EBITDA	$	216		$	183		$	430		$	368

Three months ended June 30, 2016 vs. three months ended June 30, 2015

Modified EBITDA increased primarily due to lower operating and maintenance expenses and lower impairment charges.

Service revenues decreased due to a decline in gathering and processing fee-based revenues from our Ohio Valley Midstream operations associated with producer shut-ins and lower rates, partially offset by an increase in gathering revenues in the Susquehanna Supply Hub primarily due to higher volumes.

Other segment costs and expenses decreased primarily due to a $20 million decrease in operating and maintenance expenses primarily resulting from lower costs related to supplies, outside services, and repairs.

Impairment of long-lived assets changed favorably primarily due to the absence of $20 million of impairment charges associated with certain surplus equipment within our Ohio Valley Midstream business in 2015. (See Note 9 – Fair Value Measurements and Guarantees of Notes to Consolidated Financial Statements.)

Management’s Discussion and Analysis (Continued)

Six months ended June 30, 2016 vs. six months ended June 30, 2015

Modified EBITDA increased primarily due to lower operating and maintenance expenses and lower impairment charges, as well as improvements in Proportional Modified EBITDA of equity-method investments driven by higher volumes and the absence of certain impairments from 2015.

Service revenues include an increase in Utica Shale gathering revenues primarily due to growth in volumes associated with new well connects and also an increase in Susquehanna Supply Hub gathering revenues resulting from fewer producer shut-ins associated with improved regional natural gas prices. In addition, fee-based revenues increased due to increased reimbursements for management services from certain equity-method investees, partially offset by a decline from our Ohio Valley Midstream operations associated with producer shut-ins and lower rates.

Product sales decreased primarily due to an $18 million decline in marketing sales in the Ohio Valley Midstream business, comprised primarily of a $14 million decline associated with a 22 percent decrease in non-ethane volumes and a $6 million decrease reflecting a 12 percent decline in non-ethane per-unit marketing sales prices. The changes in marketing revenues are offset by similar changes in marketing purchases, reflected above as Product costs.

Other segment costs and expenses decreased primarily due to a $19 million decrease in operating and maintenance expenses primarily resulting from lower costs related to supplies, outside services, and repairs.

Proportional Modified EBITDA of equity-method investments improved primarily due to a $12 million increase from UEOM associated with higher volumes and an increase in our ownership percentage, a $12 million increase from Caiman II resulting from higher volumes due to assets placed into service in 2015, and a $10 million increase from Laurel Mountain primarily due to the absence of impairments incurred during 2015. These increases were partially offset by a $12 million decrease from Appalachian Midstream Investments primarily due to lower fee revenues driven by lower rates.

Atlantic-Gulf



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(Millions)
Service revenues	$	448		$	466		$	914		$	924
Product sales	105			125			174			246
Segment revenues	553			591			1,088			1,170

Product costs	(97		)	(119		)	(161		)	(232		)
Other segment costs and expenses	(167		)	(150		)	(327		)	(319		)
Impairment of long-lived assets	—			—			(1		)	—
Proportional Modified EBITDA of equity-method investments	68			67			134			105
Atlantic-Gulf Modified EBITDA	$	357		$	389		$	733		$	724

NGL margin	$	7		$	5		$	12		$	12

Three months ended June 30, 2016 vs. three months ended June 30, 2015

Modified EBITDA decreased primarily due to lower service revenues and higher segment costs and expenses.

Service revenues decreased primarily due to a $32 million decrease in Eastern Gulf Coast fee revenues primarily due to lower volumes, including the impact of suspending operations in order to facilitate the tie-in of the Gunflint

Management’s Discussion and Analysis (Continued)

expansion at Gulfstar One. This decrease was partially offset by a $19 million increase in Transco’s natural gas transportation fee revenues primarily associated with expansion projects placed in service in 2015 and 2016.

Product sales and Product costs decreased primarily due to a $16 million decrease in system management gas sales from Transco. System management gas sales are offset in Product costs and, therefore, have no impact on Modified EBITDA.

Other segment costs and expenses increased due to higher operating expenses primarily related to higher contract services for hydrostatic testing, safety, and general maintenance at Transco. In addition, project development costs are higher as we discontinued capitalization of these costs at Constitution beginning in April 2016, and equity AFUDC also changed unfavorably associated with a decrease in spending on Constitution. These increases were partially offset by lower general and administrative expenses driven by first-quarter 2016 workforce reductions and ongoing cost containment efforts.

Six months ended June 30, 2016 vs. six months ended June 30, 2015

Modified EBITDA increased primarily due to higher earnings at Discovery due to the completion of the Keathley Canyon Connector in the first quarter of 2015, partially offset by lower service revenues and higher segment costs and expenses.

Service revenues decreased primarily due to a $42 million decrease in Eastern Gulf Coast fee revenues primarily related to lower volumes, including the impact of suspending operations in order to facilitate the tie-in of the Gunflint expansion at Gulfstar One and 2016 producers’ operational issues, a $15 million decrease in Transco’s storage revenue related to potential refunds associated with a ruling received in certain rate case litigation in 2016, and an $8 million decrease in Western Gulf Coast fee revenues primarily related to lower volumes associated with producer maintenance in 2016 and natural declines in certain production areas. These decreases are partially offset by a $55 million increase in Transco’s natural gas transportation fee revenues primarily associated with expansion projects placed in service in 2015 and 2016, partially offset by lower volume-based transportation services revenues.

Product sales decreased primarily due to:

•

A $47 million decrease in crude oil and NGL marketing revenues. Crude oil marketing sales decreased $27 million associated with 27 percent lower crude oil per barrel sales prices and 6 percent lower volumes. NGL marketing sales decreased $20 million associated with 17 percent lower non-ethane per-unit sales prices and 17 percent lower non-ethane sales volumes. These changes in marketing revenues are offset by similar changes in marketing purchases;


•	A $22 million decrease in system management gas sales from Transco. System management gas sales are offset in Product costs and, therefore, have no impact on Modified EBITDA.

Product costs decreased primarily due to:


•	A $51 million decrease in marketing purchases (substantially offset in Product sales);


•	A $22 million decrease in system management gas costs (offset in Product sales).

Other segment costs and expenses includes higher project development costs as we discontinued capitalization of these costs at Constitution beginning in April 2016, and equity AFUDC also changed unfavorably associated with a decrease in spending on Constitution. In addition, operating expenses increased primarily due to higher contract services for hydrostatic testing, safety, and general maintenance and operating taxes at Transco, and $8 million of first-quarter 2016 severance and related costs recognized associated with workforce reductions. These increases are partially offset by $14 million lower general and administrative expenses driven by first-quarter 2016 workforce reductions and ongoing cost containment efforts, as well as a favorable change in the deferral of asset retirement obligation-related depreciation to a regulatory asset.

Management’s Discussion and Analysis (Continued)

The increase in Proportional Modified EBITDA of equity-method investments is primarily due to a $28 million increase from Discovery primarily due to higher fee revenues attributable to the completion of the Keathley Canyon Connector in the first quarter of 2015.

West



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(Millions)
Service revenues	$	255		$	258		$	518		$	520
Product sales	78			68			130			132
Segment revenues	333			326			648			652

Product costs	(43		)	(37		)	(74		)	(73		)
Other segment costs and expenses	(131		)	(139		)	(258		)	(268		)
Impairment of long-lived assets	(1		)	—			(3		)	—
West Modified EBITDA	$	158		$	150		$	313		$	311

NGL margin	$	33		$	29		$	53		$	54

Three months ended June 30, 2016 vs. three months ended June 30, 2015

Modified EBITDA increased due to reduced expenses associated with workforce reductions, lower major maintenance and operating charges and increased NGL margins associated with lower gas prices and higher volumes.

Service revenues decreased primarily due to a $7 million reduction associated with reduced gathering volumes in the Piceance region and reduced gathering rates and volumes in the Four Corners region. Partially offsetting these reductions are increased gathering and processing revenues of $6 million associated with higher gathering and processing rates in our Niobrara operations.

Product sales increased primarily due to a $6 million increase in revenues associated with our equity NGLs due to increased ethane and non-ethane volumes. Additionally, NGL marketing revenue increased $6 million due to increased non-ethane volumes (offset in Product costs).

Product costs increased primarily due to a $6 million increase in NGL marketing purchases (offset in Product sales), partially offset by a 25 percent decline in the per-unit cost of natural gas.

Other segment costs and expenses decreased due to lower labor-related costs driven by first-quarter 2016 workforce reductions and lower major maintenance and operating charges.

Six months ended June 30, 2016 vs. six months ended June 30, 2015

Modified EBITDA increased due to lower costs associated with workforce reductions and major maintenance and operating charges. Partially offsetting these items were reductions in revenues.

Service revenues decreased due to a $12 million reduction associated with reduced gathering volumes in the Piceance region and reduced gathering rates and volumes in the Four Corners region. Offsetting these reductions is increased gathering and processing revenues of $12 million associated with higher gathering and processing rates in our Niobrara operations.

Product sales decreased primarily due to a $5 million decrease in revenues from our equity NGLs associated with 18 percent lower average per-unit non-ethane sales prices. Other product sales declined approximately $4 million. Partially offsetting these reductions is increased marketing revenues of $7 million due to increased non-ethane volumes (offset in Product costs).

Management’s Discussion and Analysis (Continued)

Product costs increased slightly primarily due to a $7 million increase in NGL marketing purchases (offset in Product sales) partially offset by a $4 million reduction associated with the production of equity NGLs primarily due to lower natural gas prices.

Other segment costs and expenses decreased due to lower labor-related costs driven by first-quarter 2016 workforce reductions and lower major maintenance and operating charges.

NGL & Petchem Services



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(Millions)
Service revenues	$	54		$	34		$	92		$	66
Product sales	463			513			869			956
Segment revenues	517			547			961			1,022

Product costs	(387		)	(448		)	(712		)	(872		)
Other segment costs and expenses	(63		)	(76		)	(146		)	(132		)
Net insurance recoveries – Geismar Incident	—			126			—			126
Impairment of long-lived assets	(343		)	—			(343		)	—
Proportional Modified EBITDA of equity-method investments	15			9			32			20
NGL & Petchem Services Modified EBITDA	$	(261	)	$	158		$	(208	)	$	164

Olefins margin	$	74		$	61		$	145		$	70
NGL margin	1			2			6			11

Three months ended June 30, 2016 vs. three months ended June 30, 2015

Modified EBITDA decreased primarily due to the impairment of our Canadian operations held for sale and the absence of insurance proceeds related to the Geismar Incident that we received in 2015, partially offset by higher service revenues associated with the expansion of our Redwater facilities, and higher olefin margins. The increase in olefin margins is comprised of a $15 million increase at the RGP Splitter due to favorable feedstock prices, a $12 million increase at Geismar due to higher production levels in 2016 than in 2015, partially offset by unfavorable margins in Canada.

Service revenues improved primarily due to the expansion of our Redwater facilities in March 2016 to provide transportation and fractionation services associated with the Williams Horizon liquids extraction plant.

Product sales decreased primarily due to:


•	A $22 million decrease in marketing revenues primarily due to lower non-ethane prices (substantially offset by lower Product costs);


•	A $15 million decrease in Canadian NGL sales revenues primarily due to lower volumes, including $10 million lower ethane volumes due primarily to the shut-down and evacuation of our liquids extraction plant because of wild fires in the Fort McMurray area during May and June, as well as a longer period of planned maintenance in 2016;

•

An $11 million decrease in olefin sales reflecting a $22 million decrease from our RGP Splitter and a $17 million decrease from our Canadian operations, partially offset by $28 million in higher sales from our Geismar plant. The decrease in sales for Canada and the RGP Splitter are primarily due to lower volumes, as well as 20 percent lower propylene prices at the RGP Splitter. Canadian volumes declined due to previously discussed operational issues and longer periods of planned maintenance. The increase in sales at the Geismar plant is

Management’s Discussion and Analysis (Continued)

due to a $62 million increase in volumes as the plant is operating at higher production levels in 2016 than in 2015, partially offset by $34 million in primarily lower ethylene prices.

Product costs decreased primarily due to:


•	An $18 million decrease in marketing product costs primarily due to lower non-ethane per-unit costs (more than offset by lower Product sales);


•	A $14 million decrease in NGL product costs reflecting lower volumes and a decline in the price of natural gas associated with the production of equity NGLs;

•

A $24 million decrease in olefin feedstock purchases primarily comprised of $36 million lower costs at our RGP Splitter, partially offset by $16 million in higher cost at our Geismar plant. The decrease in costs at our RGP Splitter is due to $24 million in lower per-unit costs and $12 million in lower volumes. The increase in costs at our Geismar plant is comprised of $21 million in higher volumes resulting from the plant’s higher production levels in 2016 than in 2015, partially offset by $5 million in lower ethane per-unit prices.

The decrease in Other segment costs and expenses is primarily due to lower contract services and labor-related expenses reflecting higher costs incurred in 2015 associated with the start-up of the Geismar plant, as well as certain reduced maintenance activities at our storage facilities in 2016.

Net insurance recoveries - Geismar Incident decreased $126 million as insurance proceeds were received in 2015, while no proceeds were received in 2016.

Impairment of long-lived assets reflects the second quarter 2016 impairment of our Canadian operations as these assets are held for sale as of June 30, 2016 (see Note 9 – Fair Value Measurements and Guarantees).

Six months ended June 30, 2016 vs. six months ended June 30, 2015

Modified EBITDA decreased in 2016 compared to 2015 primarily due to the impairment of our Canadian operations held for sale and lower insurance proceeds related to the Geismar Incident, partially offset by higher olefin margins driven by higher production levels at the Geismar facility in 2016 than in 2015 and higher service revenues associated with the expansion of our Redwater facilities.

Service revenues improved primarily due the expansion of our Redwater facilities in March 2016 to provide transportation and fractionation services associated with the Williams Horizon liquids extraction plant.

Product sales decreased primarily due to:


•	A $111 million decrease in marketing revenues primarily due to lower prices across all products, partially offset by higher natural gas, polymer-grade propylene, and non-ethane volumes (offset in Product costs).

•

A $26 million decrease in Canadian NGL sales revenues comprised of a $17 million decrease associated with lower volumes and a $9 million decrease associated with lower prices across all products. The lower volumes are associated with previously discussed wild fires in the area and longer periods of planned maintenance, while prices reflect 22 percent lower ethane prices and 52 percent lower propane prices.

•

A $54 million increase in olefin sales comprised of a $124 million increase from our Geismar plant that returned to service in late March 2015, partially offset by a $41 million decrease from our RGP Splitter and a $29 million decrease in our Canadian operations. The increase at Geismar includes $213 million associated with increased volumes as a result of the plant operating at higher production levels in 2016 than when production resumed in March 2015, partially offset by $89 million in lower per-unit sales prices. The decrease in olefin sales associated with the RGP Splitter and our Canadian operations are associated with both lower volumes and lower per-unit sales prices.

Management’s Discussion and Analysis (Continued)

Product costs decreased primarily due to:


•	A $111 million decrease in marketing product costs primarily due to lower per-unit costs associated with all products, partially offset by higher natural gas, polymer-grade propylene, and non-ethane volumes (offset by lower Product sales).


•	A $21 million decrease in NGL product costs due to a $13 million decrease in primarily propane and ethane volumes and an $8 million decrease reflecting the decline in the price of natural gas associated with the production of equity NGLs.

•

A $21 million decrease in olefin feedstock purchases is primarily comprised of $67 million in lower purchases at our RGP splitter, partially offset by $52 million of higher purchases due to increased volumes at our Geismar plant resulting from higher productions levels. The lower costs at the RGP splitter are comprised of $51 million in lower per-unit feedstock costs and $16 million in lower propylene volumes.

The increase in Other segment costs and expenses includes a $15 million unfavorable change in foreign currency exchange that primarily relates to losses on foreign currency transactions and the remeasurement of U.S. dollar denominated current assets and liabilities within our Canadian operations.

Net insurance recoveries - Geismar Incident decreased $126 million as insurance proceeds were received in 2015, while no proceeds were received in 2016.

Impairment of long-lived assets reflects the 2016 impairment of our Canadian operations as these assets are held for sale as of June 30, 2016 (see Note 9 – Fair Value Measurements and Guarantees).

The increase in Proportional modified EBITDA of equity-method investments reflects a $10 million improvement at OPPL due primarily to higher Bakken transportation volumes.

Management’s Discussion and Analysis (Continued)

Management’s Discussion and Analysis of Financial Condition and Liquidity

Outlook

We continue to transition to an overall business mix that is increasingly fee-based. Although our cash flows are impacted by fluctuations in energy commodity prices, that impact is somewhat mitigated by certain of our cash flow streams that are not directly impacted by short-term commodity price movements, including:


•	Firm demand and capacity reservation transportation revenues under long-term contracts;


•	Fee-based revenues from certain gathering and processing services.

However, we are indirectly exposed to longer duration depressed energy commodity prices and the related impact on drilling activities and volumes available for gathering and processing services.

We believe we have, or have access to, the financial resources and liquidity necessary to meet our requirements for working capital, capital and investment expenditures, unitholder distributions, and debt service payments while maintaining a sufficient level of liquidity. In particular, as previously discussed in Company Outlook, our expected growth capital and investment expenditures total approximately $1.9 billion in 2016. We retain the flexibility to adjust planned levels of capital and investment expenditures in response to changes in economic conditions or business opportunities. We expect proceeds from the planned sale of our Canadian operations during 2016.

Liquidity

Based on our forecasted levels of cash flow from operations and other sources of liquidity, we expect to have sufficient liquidity to manage our businesses in 2016. Our internal and external sources of consolidated liquidity include:


•	Cash and cash equivalents on hand;


•	Cash generated from operations, including cash distributions from our equity-method investees;


•	Cash proceeds from issuances of debt and/or equity securities, including issuances under our equity distribution agreement;


•	New distribution reinvestment program (DRIP);


•	Use of our credit facilities and/or commercial paper program;


•	Transco’s January 2016 debt issuance described further below;


•	Proceeds from planned sale of Canadian operations.

We anticipate our more significant uses of cash to be:


•	Working capital requirements;


•	Maintenance and expansion capital and investment expenditures;


•	Interest on our long-term debt;


•	Repayment of current debt maturities;


•	Quarterly distributions to our unitholders and general partner, including IDRs.

Management’s Discussion and Analysis (Continued)

We expect to implement a DRIP in the third quarter of 2016. Williams has announced that it plans to reinvest approximately $1.7 billion in us through 2017. Williams plans to reinvest $500 million in 2016, including $250 million in the third quarter via a private purchase of common units, with the balance reinvested via the DRIP. The remaining $1.2 billion is planned to be reinvested in 2017 via the DRIP.

Potential risks associated with our planned levels of liquidity discussed above include those previously discussed in Company Outlook.

As of June 30, 2016, we had a working capital deficit (current liabilities, inclusive of $196 million in Commercial paper outstanding and $786 million in Long-term debt due within one year, in excess of current assets) of $529 million. Our available liquidity is as follows:



Available Liquidity	June 30, 2016
	(Millions)
Cash and cash equivalents	$	101
Capacity available under our $3.5 billion credit facility, less amounts outstanding under our $3 billion commercial paper program (1)	1,879
Capacity available under our short-term credit facility (2)	150
	$	2,130

(1)

In managing our available liquidity, we do not expect a maximum outstanding amount in excess of the capacity of our credit facility inclusive of any outstanding amounts under our commercial paper program. Through June 30, 2016, the highest amount outstanding under our commercial paper program and credit facility during 2016 was $1.856 billion. At June 30, 2016, we were in compliance with the financial covenants associated with this credit facility. See Note 8 – Debt and Banking Arrangements of Notes to Consolidated Financial Statements for additional information on our commercial paper program. Borrowing capacity available under our $3.5 billion credit facility as of July 29, 2016, was $1.888 billion.


(2)	Borrowing capacity available under this facility as of July 29, 2016, was $150 million. This facility expires on August 24, 2016.

On September 24, 2015, we received a special distribution of $396 million from Gulfstream reflecting our proportional share of the proceeds from new debt issued by Gulfstream. The new debt was issued to refinance Gulfstream’s debt maturities. Subsequently, we contributed $248 million and $148 million to Gulfstream for our proportional share of amounts necessary to fund debt maturities of $500 million due on November 1, 2015, and $300 million due on June 1, 2016, respectively.

Incentive Distribution Rights

Williams has agreed to temporarily waive incentive distributions of approximately $2 million per quarter in connection with our acquisition of 13 percent additional interest in UEOM on June 10, 2015. The waiver will continue through the quarter ending September 30, 2017.

Williams was required to pay us a $428 million termination fee associated with the Termination Agreement (as described in Note 1 – General, Description of Business, and Basis of Presentation of Notes to Consolidated Financial Statements), which settled through a reduction of quarterly incentive distributions payable to Williams (such reduction not to exceed $209 million per quarter). The November 2015, February 2016, and May 2016 distributions to Williams were reduced by $209 million, $209 million, and $10 million, respectively, related to this termination fee.

Debt Issuances and Retirements

Northwest Pipeline retired $175 million of 7 percent senior unsecured notes that matured on June 15, 2016.

Transco retired $200 million of 6.4 percent senior unsecured notes that matured on April 15, 2016.

Management’s Discussion and Analysis (Continued)

On January 22, 2016, Transco issued $1 billion of 7.85 percent senior unsecured notes due 2026 to investors in a private debt placement. Transco used the net proceeds from the offering to repay debt and to fund capital expenditures.

Shelf Registration

In February 2015, we filed a shelf registration statement, as a well-known seasoned issuer and we also filed a shelf registration statement for the offer and sale from time to time of common units representing limited partner interests in us having an aggregate offering price of up to $1 billion. These sales are to be made over a period of time and from time to time in transactions at prices which are market prices prevailing at the time of sale, prices related to market price, or at negotiated prices. Such sales are to be made pursuant to an equity distribution agreement between us and certain banks who may act as sales agents or purchase for their own accounts as principals. From February 2015 through June 30, 2016, we have received net proceeds of approximately $59 million from equity issued under this registration.

Distributions from Equity-Method Investees

The organizational documents of entities in which we have an equity-method investment generally require distribution of their available cash to their members on a quarterly basis. In each case, available cash is reduced, in part, by reserves appropriate for operating their respective businesses.

Credit Ratings

Our ability to borrow money is impacted by our credit ratings. Our current ratings are as follows:



Rating Agency	Outlook	Senior Unsecured Debt Rating	Corporate Credit Rating
S&P Global Ratings	Negative	BBB-	BBB-
Moody’s Investors Service	Negative	Baa3	N/A
Fitch Ratings	Stable	BBB-	N/A

As of June 30, 2016, we estimated that a downgrade to a rating below investment grade could require us to post up to $455 million in additional collateral with third parties.

Cash Distributions to Unitholders

The Board of Directors of our general partner declared a cash distribution of $0.85 per common unit on July 26, 2016, to be paid on August 12, 2016, to unitholders of record at the close of business on August 5, 2016.

Sources (Uses) of Cash

The following table summarizes the increase (decrease) in cash and cash equivalents for each of the periods presented:



	Six Months Ended June 30,
	2016			2015
	(Millions)
Net cash provided (used) by:
Operating activities	$	1,665		$	1,493
Financing activities	(971		)	344
Investing activities	(682		)	(1,822		)
Increase (decrease) in cash and cash equivalents	$	12		$	15

Operating activities

The factors that determine operating activities are largely the same as those that affect Net income (loss), with the exception of noncash items such as Depreciation and amortization, Impairment of equity-method investments, and

Management’s Discussion and Analysis (Continued)

Impairment of and net (gain) loss on sale of Property, plant, and equipment. Our Net cash provided (used) by operating activities in 2016 increased from 2015 primarily due to net favorable changes in operating working capital and cash received related to Hillabee (see Expansion Projects).

Financing activities

Significant transactions include:


•	$304 million in 2016 of net payments of commercial paper;


•	$942 million in 2015 of net proceeds from commercial paper;


•	$998 million in 2016 and $2.992 billion in 2015 net received from our debt offerings;


•	$375 million in 2016 and $1.533 billion in 2015 paid on our debt retirements;


•	$1.94 billion in 2016 and $1.832 billion in 2015 received from our credit facility borrowings;


•	$1.825 billion in 2016 and $2.472 billion in 2015 paid on our credit facility borrowings;


•	$1.231 billion, including $808 million to Williams, in 2016 and $1.45 billion, including $1.03 billion to Williams, in 2015 related to quarterly cash distributions paid to limited partner unitholders and the general partner;


•	$148 million in 2016 paid in contribution to Gulfstream for repayment of debt;


•	$22 million in 2016 and $57 million in 2015 received in contributions from noncontrolling interests.

Investing activities

Significant transactions include:


•	Capital expenditures of $981 million in 2016 and $1.45 billion in 2015;


•	$112 million in 2015 paid to purchase a gathering system comprised of approximately 140 miles of pipeline and a sour gas compression facility in the Eagle Ford shale;


•	Purchases of and contributions to our equity-method investments of $122 million in 2016 and $483 million in 2015;


•	Distributions from unconsolidated affiliates in excess of cumulative earnings of $261 million in 2016 and $122 million in 2015.

Off-Balance Sheet Arrangements and Guarantees of Debt or Other Commitments

We have various other guarantees and commitments which are disclosed in Note 2 – Variable Interest Entities, Note 8 – Debt and Banking Arrangements, Note 9 – Fair Value Measurements and Guarantees, and Note 10 – Contingent Liabilities of Notes to Consolidated Financial Statements. We do not believe these guarantees and commitments or the possible fulfillment of them will prevent us from meeting our liquidity needs.

Item 3

Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our current interest rate risk exposure is related primarily to our debt portfolio and has not materially changed during the first six months of 2016.

Foreign Currency Risk

Our foreign operations, whose functional currency is the local currency, are located in Canada. These foreign operations have been classified as held for sale at June 30, 2016. Net assets of our foreign operations were approximately $754 million and $916 million at June 30, 2016 and December 31, 2015, respectively. These investments have the potential to impact our financial position due to fluctuations in the local currency arising from the process of translating the local functional currency into the U.S. dollar. As an example, a 20 percent change in the functional currency against the U.S. dollar would have changed Total partners’ equity by approximately $151 million and $183 million at June 30, 2016 and December 31, 2015, respectively. Any local currency proceeds associated with the anticipated sale of these operations would also be exposed to fluctuations in foreign currency exchange rates.

Item 4

Controls and Procedures

Our management, including our general partner’s Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures (as defined in Rules 13a - 15(e) and 15d - 15(e) of the Securities Exchange Act) (Disclosure Controls) or our internal control over financial reporting (Internal Controls) will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Williams Partners L.P. have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We monitor our Disclosure Controls and Internal Controls and make modifications as necessary; our intent in this regard is that the Disclosure Controls and Internal Controls will be modified as systems change and conditions warrant.

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our Disclosure Controls was performed as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of our management, including our general partner’s Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our general partner’s Chief Executive Officer and Chief Financial Officer concluded that these Disclosure Controls are effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes during the second quarter of 2016 that materially affected, or are reasonably likely to materially affect, our Internal Control over Financial Reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Environmental

Certain reportable legal proceedings involving governmental authorities under federal, state, and local laws regulating the discharge of materials into the environment are described below. While it is not possible for us to predict the final outcome of the proceedings which are still pending, we do not anticipate a material effect on our consolidated financial position if we receive an unfavorable outcome in any one or more of such proceedings.

In November 2013, we became aware of deficiencies with the air permit for the Fort Beeler gas processing facility located in West Virginia. We notified the EPA and the West Virginia Department of Environmental Protection and worked to bring the Fort Beeler facility into full compliance. On April 26, 2016, the EPA executed a consent order resolving various air permitting and emissions issues requiring payment of $140,000 in civil penalties which was paid on May 13, 2016. We do not anticipate penalties being imposed by the West Virginia Department of Environmental Protection.

On January 21, 2016, we received a Compliance Order from the Pennsylvania Department of Environmental Protection requiring the correction of several alleged deficiencies arising out of the construction of the Springville Gathering Line, the Pennsylvania Mainline Gathering Line, and the 2008 Core Zone Gathering Line. The Order also identifies civil penalties in the amount of approximately $712,000. We are working with the Pennsylvania Department of Environmental Protection to address certain issues and are in the process of negotiating the Order and the associated penalty.

Other

The additional information called for by this item is provided in Note 10 – Contingent Liabilities of the Notes to Consolidated Financial Statements included under Part I, Item 1. Financial Statements of this report, which information is incorporated by reference into this item.

Item 1A. Risk Factors

Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2015, includes certain risk factors that could materially affect our business, financial condition, or future results. The risk factors listed below pertaining to the ETC Merger are no longer applicable:


•	The pendency of the proposed ETC Merger between Energy Transfer and Williams could adversely affect our business and operations.


•	The notes we acquired from ACMP in the ACMP Merger contain provisions that would require us to make an offer to repurchase such notes should our credit be downgraded within a period of ninety days following the completion of the proposed ETC Merger.

Our remaining risk factors are supplemented as set forth below:

Following ETE’s termination of and failure to close the ETC Merger, perceived uncertainties concerning Williams’ strategic direction may have an adverse effect on our business.

As a subsidiary of Williams, we may suffer from the lingering effects of ETE’s termination of and failure to close the ETC Merger including, among other circumstances, perceived uncertainties as to Williams’ future strategic direction. Such uncertainties may harm our ability to attract investors in order to raise capital, impact our existing and potential relationships with customers and strategic partners, result in the loss of business opportunities and make it more difficult for Williams to attract and retain qualified personnel who provide services to us. Such uncertainties could also depress our unit price.

Item 6. Exhibits



Exhibit No.		Description

§Exhibit 2.1	—	Agreement and Plan of Merger dated as of May 12, 2015, by and among The Williams Companies, Inc., SCMS LLC, Williams Partners L.P., and WPZ GP LLC (filed on May 13, 2015 as Exhibit 2.1 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.1	—	Certificate of Limited Partnership of Chesapeake Midstream Partners, L.P. (filed on February 16, 2010 as Exhibit 3.1 to Williams Partners L.P.’s registration statement on Form S-1 (File No. 333-164905) and incorporated herein by reference).
Exhibit 3.2	—	Amendment to Certificate of Limited Partnership of Chesapeake Midstream Partners, L.P. (filed on July 30, 2012 as Exhibit 3.1 to Williams Partners L.P.’s current report on Form 8‑K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.3	—	Amendment to Certificate of Limited Partnership of Access Midstream Partners, L.P. (filed on February 3, 2015 as Exhibit 3.5 to Williams Partners L.P.’s current report on Form 8‑K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.4	—	Composite Certificate of Limited Partnership of Williams Partners L.P. (filed on February 25, 2015 as Exhibit 3.4 to Williams Partners L.P.’s annual report on Form 10-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.5	—	First Amended and Restated Agreement of Limited Partnership of Chesapeake Midstream Partners, L.P., dated August 3, 2010 (filed on August 5, 2010 as Exhibit 3.1 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.6	—	Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership of Chesapeake Midstream Partners, L.P. dated as of July 24, 2012 (filed on July 30, 2012 as Exhibit 3.3 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.7	—	Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Access Midstream Partners, L.P. dated as of December 20, 2012 (filed on December 26, 2012 as Exhibit 3.1 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.8	—	Amendment No. 3 to the First Amended and Restated Agreement of Limited Partnership of Access Midstream Partners, L.P. dated as of January 29, 2015 (filed on February 3, 2015 as Exhibit 3.1 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.9	—	Amendment No. 4 to the First Amended and Restated Agreement of Limited Partnership of Access Midstream Partners, L.P. dated as of January 29, 2015 (filed on February 3, 2015 as Exhibit 3.4 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.10	—	Amendment No. 5 to the First Amended and Restated Agreement of Limited Partnership of Williams Partners L.P., dated as of June 10, 2015 (filed on June 12, 2015 as Exhibit 3 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.11	—	Amendment No. 6 to the First Amended and Restated Agreement of Limited Partnership of Williams Partners L.P., dated September 28, 2015 (filed on September 28, 2015 as Exhibit 3.1 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).



Exhibit No.		Description

Exhibit 3.12	—	Composite Agreement of Limited Partnership of Williams Partners L.P. (filed on October 29, 2015 as Exhibit 3.12 to Williams Partners L.P.'s quarterly report on Form 10-Q (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.13	—	Certificate of Formation of Chesapeake Midstream GP, L.L.C. (filed on February 16, 2010 as Exhibit 3.3 to Williams Partners L.P.’s registration statement on Form S-1 (File No. 333-164905) and incorporated herein by reference).
Exhibit 3.14	—	Certificate of Amendment to Certificate of Formation of Chesapeake Midstream GP, L.L.C. (filed on July 30, 2012 as Exhibit 3.5 to Williams Partners L.P.’s current report on Form 8‑K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.15	—	Certificate of Amendment to Certificate of Formation of Access Midstream Partners GP, L.L.C. (filed on February 3, 2015 to Williams Partners L.P.’s current report on Form 8‑K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.16	—	Composite Certificate of Formation of WPZ GP LLC (filed on February 25, 2015 as Exhibit 3.14 to Williams Partners L.P.’s annual report on Form 10-K (File No. 001-34831) and incorporated herein by reference).
*Exhibit 3.17	—	Eighth Amended and Restated Limited Liability Company Agreement of WPZ GP LLC.
Exhibit 10.1	—	Termination Agreement and Release, dated as of September 28, 2015, by and among The Williams Companies, Inc., SCMS LLC, Williams Partners L.P. and WPZ GP LLC (filed on September 28, 2015 as Exhibit 10.1 to Williams Partners L.P.’s current report on Form 8‑K (File No. 001-34831) and incorporated herein by reference).
*Exhibit 12	—	Computation of Ratio of Earnings to Fixed Charges.
*Exhibit 31.1	—	Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*Exhibit 31.2	—	Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
**Exhibit 32	—	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*Exhibit 101.INS	—	XBRL Instance Document.
*Exhibit 101.SCH	—	XBRL Taxonomy Extension Schema.
*Exhibit 101.CAL	—	XBRL Taxonomy Extension Calculation Linkbase.
*Exhibit 101.DEF	—	XBRL Taxonomy Extension Definition Linkbase.
*Exhibit 101.LAB	—	XBRL Taxonomy Extension Label Linkbase.
*Exhibit 101.PRE	—	XBRL Taxonomy Extension Presentation Linkbase.


*	Filed herewith.


**	Furnished herewith.


§	Pursuant to Item 601(b)(2) of Regulation S-K., the registrant agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon request.

SIGNATURE

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, thereunto duly authorized.



	WILLIAMS PARTNERS L.P.
	(Registrant)
	By: WPZ GP LLC, its general partner

	/s/ Ted T. Timmermans
	Ted T. Timmermans
	Vice President, Controller and Chief Accounting Officer (Duly Authorized Officer and Principal Accounting Officer)

August 2, 2016

EXHIBIT INDEX



Exhibit No.		Description

§Exhibit 2.1	—	Agreement and Plan of Merger dated as of May 12, 2015, by and among The Williams Companies, Inc., SCMS LLC, Williams Partners L.P., and WPZ GP LLC (filed on May 13, 2015 as Exhibit 2.1 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.1	—	Certificate of Limited Partnership of Chesapeake Midstream Partners, L.P. (filed on February 16, 2010 as Exhibit 3.1 to Williams Partners L.P.’s registration statement on Form S-1 (File No. 333-164905) and incorporated herein by reference).
Exhibit 3.2	—	Amendment to Certificate of Limited Partnership of Chesapeake Midstream Partners, L.P. (filed on July 30, 2012 as Exhibit 3.1 to Williams Partners L.P.’s current report on Form 8‑K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.3	—	Amendment to Certificate of Limited Partnership of Access Midstream Partners, L.P. (filed on February 3, 2015 as Exhibit 3.5 to Williams Partners L.P.’s current report on Form 8‑K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.4	—	Composite Certificate of Limited Partnership of Williams Partners L.P. (filed on February 25, 2015 as Exhibit 3.4 to Williams Partners L.P.’s annual report on Form 10-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.5	—	First Amended and Restated Agreement of Limited Partnership of Chesapeake Midstream Partners, L.P., dated August 3, 2010 (filed on August 5, 2010 as Exhibit 3.1 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.6	—	Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership of Chesapeake Midstream Partners, L.P. dated as of July 24, 2012 (filed on July 30, 2012 as Exhibit 3.3 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.7	—	Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Access Midstream Partners, L.P. dated as of December 20, 2012 (filed on December 26, 2012 as Exhibit 3.1 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.8	—	Amendment No. 3 to the First Amended and Restated Agreement of Limited Partnership of Access Midstream Partners, L.P. dated as of January 29, 2015 (filed on February 3, 2015 as Exhibit 3.1 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.9	—	Amendment No. 4 to the First Amended and Restated Agreement of Limited Partnership of Access Midstream Partners, L.P. dated as of January 29, 2015 (filed on February 3, 2015 as Exhibit 3.4 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.10	—	Amendment No. 5 to the First Amended and Restated Agreement of Limited Partnership of Williams Partners L.P., dated as of June 10, 2015 (filed on June 12, 2015 as Exhibit 3 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.11	—	Amendment No. 6 to the First Amended and Restated Agreement of Limited Partnership of Williams Partners L.P., dated September 28, 2015 (filed on September 28, 2015 as Exhibit 3.1 to Williams Partners L.P.’s current report on Form 8-K (File No. 001-34831) and incorporated herein by reference).



Exhibit No.		Description

Exhibit 3.12	—	Composite Agreement of Limited Partnership of Williams Partners L.P. (filed on October 29, 2015 as Exhibit 3.12 to Williams Partners L.P.'s quarterly report on Form 10-Q (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.13	—	Certificate of Formation of Chesapeake Midstream GP, L.L.C. (filed on February 16, 2010 as Exhibit 3.3 to Williams Partners L.P.’s registration statement on Form S-1 (File No. 333-164905) and incorporated herein by reference).
Exhibit 3.14	—	Certificate of Amendment to Certificate of Formation of Chesapeake Midstream GP, L.L.C. (filed on July 30, 2012 as Exhibit 3.5 to Williams Partners L.P.’s current report on Form 8‑K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.15	—	Certificate of Amendment to Certificate of Formation of Access Midstream Partners GP, L.L.C. (filed on February 3, 2015 to Williams Partners L.P.’s current report on Form 8‑K (File No. 001-34831) and incorporated herein by reference).
Exhibit 3.16	—	Composite Certificate of Formation of WPZ GP LLC (filed on February 25, 2015 as Exhibit 3.14 to Williams Partners L.P.’s annual report on Form 10-K (File No. 001-34831) and incorporated herein by reference).
*Exhibit 3.17	—	Eighth Amended and Restated Limited Liability Company Agreement of WPZ GP LLC.
Exhibit 10.1	—	Termination Agreement and Release, dated as of September 28, 2015, by and among The Williams Companies, Inc., SCMS LLC, Williams Partners L.P. and WPZ GP LLC (filed on September 28, 2015 as Exhibit 10.1 to Williams Partners L.P.’s current report on Form 8‑K (File No. 001-34831) and incorporated herein by reference).
*Exhibit 12	—	Computation of Ratio of Earnings to Fixed Charges.
*Exhibit 31.1	—	Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*Exhibit 31.2	—	Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
**Exhibit 32	—	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*Exhibit 101.INS	—	XBRL Instance Document.
*Exhibit 101.SCH	—	XBRL Taxonomy Extension Schema.
*Exhibit 101.CAL	—	XBRL Taxonomy Extension Calculation Linkbase.
*Exhibit 101.DEF	—	XBRL Taxonomy Extension Definition Linkbase.
*Exhibit 101.LAB	—	XBRL Taxonomy Extension Label Linkbase.
*Exhibit 101.PRE	—	XBRL Taxonomy Extension Presentation Linkbase.


*	Filed herewith.


**	Furnished herewith.


§	Pursuant to Item 601(b)(2) of Regulation S-K., the registrant agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon request.

WPZ GP LLC

A Delaware Limited Liability Company

EIGHTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT

Dated as of April 20, 2016

TABLE OF CONTENTS

Page

Article I ORGANIZATION ............................................................................................................2


1.1	Continuation of the Company..........................................................................................2


1.2	Name ................................................................................................................................2


1.3	Registered Office; Registered Agent ...............................................................................2


1.4	Principal Place of Business ..............................................................................................2


1.5	Fiscal Year ........................................................................................................................2


1.6	Foreign Qualification .......................................................................................................2


1.7	Term .................................................................................................................................3


1.8	No State-Law Partnership ................................................................................................3


1.9	Purposes ...........................................................................................................................3

Article II MEMBERS; CAPITAL CONTRIBUTIONS ..................................................................3


2.1	Members ..........................................................................................................................3


2.2	Additional Capital Contributions .....................................................................................3


2.3	No Liability of the Sole Memeber....................................................................................4

Article III [INTENTIONALLY OMITTED] ...................................................................................4

Article IV DISTRIBUTIONS ..........................................................................................................4


4.1	Distributions to Members ................................................................................................4

Article V MANAGEMENT .............................................................................................................4


5.1	Management by the Board of Directors ...........................................................................4


5.2	Actions by the Board; Delegation of Authority and Duties; Reliance by Third Parties ..............................................................................................................................4


5.3	Board Composition ..........................................................................................................5


5.4	Board Meetings; Quorum; Vote Required .......................................................................6


5.5	Action by Written Consent or Telephone Conference .....................................................7


5.6	Officers ............................................................................................................................7


5.7	Actions Controlled by the Sole Member .........................................................................9


5.8	Limitation of Duties and Corporate Opportunities ........................................................12


5.9	Preemptive Rights under Partnership Agreement ..........................................................13


5.10	Certificating Equity Interests in the Partnership ............................................................13

Article VI BOOKS AND RECORDS ............................................................................................13


6.1	Books and Records ........................................................................................................13

Article VII [INTENTIONALLY OMITTED] ...............................................................................13

Article VIII EXCULPATION AND INDEMNIFICATION ..........................................................13


8.1	Performance of Duties; No Liability of the Sole Member, Directors and Officers .......13


8.2	Right to Indemnification ................................................................................................14


8.3	Advance Payment ..........................................................................................................15


8.4	Indemnification of Employees and Agents ....................................................................15


8.5	Appearance as a Witness ................................................................................................15


8.6	Nonexclusivity of Rights ...............................................................................................15


8.7	Insurance ........................................................................................................................16


8.8	Savings Clause ...............................................................................................................16


8.9	Survival ..........................................................................................................................16

Article IX DISSOLUTION, LIQUIDATION AND TERMINATION ..........................................16


9.1	Dissolution .....................................................................................................................16


9.2	Liquidation and Termination ..........................................................................................16


9.3	Effect of Incapacity ........................................................................................................17

Article X DEFINITIONS ...............................................................................................................17


10.1	Definitions ......................................................................................................................17


10.2	Construction ...................................................................................................................22

Article XI MISCELLANEOUS .....................................................................................................23


11.1	Notices ...........................................................................................................................23


11.2	Effect of Waiver or Consent ..........................................................................................24


11.3	Amendment or Modification .........................................................................................24


11.4	Binding Effect ................................................................................................................24


11.5	Governing Law ..............................................................................................................25


11.6	Further Assurances .........................................................................................................25


11.7	Waiver of Certain Rights ...............................................................................................25


11.8	Counterparts ...................................................................................................................25


11.9	Headings ........................................................................................................................25


11.10	Remedies ................................................................................................................25


11.11	Severability ............................................................................................................25

iii

INDEX OF DEFINED TERMS

Act................................................................1


Affiliate	......................................................17


Agreement	..................................................18


Audit Committee	..........................................5


Bankruptcy Event	......................................18


Board	............................................................4


Business	.......................................................3


CEO	.............................................................7


Certificate of Limited Partnership	..............18


CFO	..............................................................7


Chairman of the Board	.................................6


Closing Date	................................................1


Closing Time	................................................1


Code	...........................................................18


Commission	...............................................19


Company	......................................................1


Compensation Committee	...........................5


Conflicts Committee	...................................5


Control	........................................................19


COO	.............................................................7


Delaware Certificate	....................................1


Director	........................................................5


Equity Interests	..........................................19


Exchange Act	.............................................19


Fiscal Year	....................................................2


Governmental Authority	............................19


Incapacity	...................................................19


Incentive Distribution Right	......................19


Indebtedness	..............................................19


Independent Director	..................................20


Liens	..........................................................20


Loss	............................................................14


Member	......................................................20


Membership Interest	..................................20


Minority Subsidiary	...................................20


National Securities Exchange	....................20


Officer	........................................................20


Partnership	...................................................3


Partnership Agreement	...............................20


Partnership Group Companies	.....................3


Partnership Group Governing Documents	.21


Permitted Lien	............................................21


Person	.........................................................21


President	.......................................................7


Proceeding	.................................................14


Secretary	......................................................7


Secretary of State	.........................................1


Sixth Amended LLC Agreement	.................1


Sole Member	................................................1


Subsidiary	..................................................21


Substitute Member	.....................................22


Treasurer	......................................................7


Vice President	..............................................7

EIGHTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT
OF
WPZ GP LLC
A Delaware Limited Liability Company

This EIGHTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of WPZ GP LLC, a Delaware limited liability company (the “Company”), effective as of 12:46 p.m. (EST) on April 20, 2016 (such date, the “Closing Date”; such time on the Closing Date, the “Closing Time”), is made and entered into by THE WILLIAMS COMPANIES, INC., a Delaware corporation, as the sole member of the Company (the “Sole Member”), and the Company.

RECITALS

WHEREAS, unless the context otherwise requires, capitalized terms shall have the respective meanings ascribed to them in Section 10.1;

WHEREAS, the Company was formed as a limited liability company under the Delaware Limited Liability Company Act, Title 6, §§ 18-101, et seq. (as amended from time to time, together with any successor statute, the “Act”), pursuant to the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware (the “Secretary of State”) on January 21, 2010 (the “Delaware Certificate”);

WHEREAS, on July 23, 2012, the Company filed an amendment to the Delaware Certificate in the office of the Secretary of State changing the Company’s name from “Chesapeake Midstream GP, L.L.C.” to “Access Midstream Partners GP, L.L.C.” effective as of July 24, 2012;

WHEREAS, on February 2, 2015, the Company filed an amendment to the Delaware Certificate in the office of the Secretary of State changing the Company’s name from “Access Midstream Partners GP, L.L.C.” to “WPZ GP LLC” effective as of February 2, 2015;

WHEREAS, on April 20, 2016, the Company filed a certificate of merger in the office of the Secretary of State merging Access Midstream Ventures, L.L.C. with and into WPZ GP LLC effective at the closing time;

WHEREAS, prior to the Closing Time, the Company was governed by the Seventh Amended and Restated Limited Liability Company Agreement of the Company, dated February 2, 2015 (as amended, the “Seventh Amended and Restated LLC Agreement”), entered into by Access midstream Ventures, L.L.C. and the Company; and

WHEREAS, the parties desire that the Seventh Amended and Restated LLC Agreement be amended and restated in its entirety by this Agreement and the Company be governed by the Act and this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the promises and the covenants hereinafter contained and to induce the parties hereto to enter into this Agreement, it is agreed as followed:

ARTICLE I
ORGANIZATION

1.1 Continuation of the Company. The Company was formed as a Delaware limited liability company on January 21, 2010, by the filing of the Delaware Certificate in the office of the Secretary of State pursuant to the Act. The Sole Member desires to continue the Company for the purposes and upon the terms and conditions set forth herein. As of the Closing Time, the Seventh Amended and Restated LLC Agreement is amended and restated in its entirety by this Agreement. Except as provided herein, the rights, duties and liabilities of the Sole Member will be as provided in the Act.

1.2 Name. The name of the Company is “WPZ GP LLC”. Company business will be conducted in such name or such other names that comply with applicable law as the Board may select from time to time.

1.3 Registered Office; Registered Agent. The registered office of the Company in the State of Delaware will be the initial registered office designated in the Delaware Certificate or such other office (which need not be a place of business of the Company) as the Board may designate from time to time in the manner provided by law. The registered agent of the Company in the State of Delaware will be the initial registered agent designated in the Delaware Certificate, or such other Person or Persons as the Board may designate from time to time in the manner provided by law.

1.4 Principal Place of Business. The principal place of business of the Company will be at One Williams Center, Tulsa, OK 74172-0172 or such other location as the Board may designate from time to time, which need not be in the State of Delaware. The Company may have such other offices as the Board may determine appropriate.

1.5 Fiscal Year. The fiscal year of the Company (the “Fiscal Year”) for financial statement and applicable income tax purposes will end on December 31st unless otherwise determined by the Board or required under the Code.

1.6 Foreign Qualification. The Board is authorized to cause the Company to comply, to the extent procedures are available, with all requirements necessary to qualify the Company as a foreign limited liability company in any jurisdiction in which the Company owns property or transacts business or elsewhere where such qualification may be necessary or advisable for the protection of the limited liability of the Sole Member or to permit the Company to lawfully own property or transact business, and to obtain similar qualifications for the Company’s Subsidiaries and Minority Subsidiaries. Each Officer is authorized, on behalf of the Company, to execute, acknowledge, swear to and deliver all certificates and other instruments as may be necessary or appropriate in connection with the foregoing qualifications. Further, upon request of the Board, the Sole Member will execute, acknowledge, swear to and deliver all certificates and other instruments that are reasonably necessary or appropriate to obtain, continue, modify or terminate such qualifications.

1.7 Term. The term of the Company commenced on the date the Delaware Certificate was filed with the office of the Secretary of State and shall continue until the Company is dissolved as determined under Section 9.1.

1.8 No State-Law Partnership. The Sole Member intends that the Company shall not be a partnership (including, without limitation, a limited partnership) or joint venture, and that neither the Sole Member nor any Officer shall be a partner or joint venturer of the Sole Member or any other Officer, for any purposes, and this Agreement shall not be construed to the contrary.

1.9 Purposes. The nature or purposes of the business to be conducted or promoted by the Company is to engage in the operation and management of Williams Partners L.P., a Delaware limited partnership (the “Partnership”), in accordance with the Partnership Agreement, and the ownership of Equity Interests of the Partnership, including actions that the Partnership may undertake with respect to its Subsidiaries and Minority Subsidiaries (the Partnership and its Subsidiaries and Minority Subsidiaries, collectively, the “Partnership Group Companies”) and in any other lawful act or activity incidental or related thereto authorized by the Board and, if required, the Sole Member, for which limited liability companies may be organized under the Act (the “Business”). The Company may engage in any and all activities necessary, desirable or incidental to the accomplishment of the foregoing. In furtherance of its purpose, (a) the Company shall have and may exercise all of the powers now or hereafter conferred by Delaware law on limited liability companies formed under the Act and (b) the Company shall have the power to do any and all acts necessary, appropriate, proper, advisable, incidental or convenient to or for the protection and benefit of the Company. Notwithstanding anything herein to the contrary, nothing set forth herein shall be construed as authorizing the Company to possess any purpose or power, or to do any act or thing, forbidden by law to a limited liability company formed under the laws of the State of Delaware.

ARTICLE II

MEMBERS; CAPITAL CONTRIBUTIONS

2.1 Members. The Sole Member owns One Hundred Percent (100%) of the Membership Interests. Additional Person(s) may be admitted to the Company as Members upon the approval of the Sole Member, without any approval of the Board, on such terms and conditions as the Sole Member determines at the time of such admission. The terms of admission may provide for the creation of different classes or groups of Members having different rights, powers and duties. The Members may reflect the creation of any new class or group in an amendment to this Agreement indicating the different rights, powers and duties, and such an amendment shall be approved and executed by the Members. Any such admission is effective only after such new Member has executed and delivered to the Members and the Company an instrument containing the notice address of the new Member and such new Member’s ratification of this Agreement and agreement to be bound by it.

2.2 Additional Capital Contributions. The Sole Member may, from time to time, in conformity with this Agreement, make additional capital contributions to the capital of the Company, but shall have no obligation to do so.

2.3 No Liability of the Sole Member. Except as otherwise required by applicable law, the Sole Member shall not have any personal liability whatsoever hereunder in its capacity as the Sole Member, whether to the Company, to the creditors of the Company or to any other third party, for the debts, liabilities, commitments or any other obligations of the Company or for any losses of the Company.

ARTICLE III

[INTENTIONALLY OMITTED]

ARTICLE IV

DISTRIBUTIONS

4.1 Distributions to Members.

(a) Distributions. Subject to Sections 4.1(b) and 9.2, distributions will be made to the Sole Member at such time and in such amounts as the Sole Member shall determine in its sole discretion.

(b) Limitations on Distributions. Notwithstanding any provision to the contrary contained in this Agreement, neither the Company nor the Sole Member or the Board, on behalf of the Company, shall be required or permitted to make a distribution to any Person in violation of the Act or other applicable law. Any distributions pursuant to this ARTICLE IV made in error or in violation of Section 18-607(a) of the Act, will, upon demand by the Board, be returned to the Company.

ARTICLE V

MANAGEMENT

5.1 Management by the Board of Directors. Except for cases in which the approval or determination of the Sole Member is required by this Agreement or by non-waivable provisions of applicable law, including the Act, the powers, business and affairs of the Company that relate to management and control of the Partnership Group Companies shall be exercised by or under the authority of, and such business and affairs of the Company shall be managed under the direction of, a single board of directors (the “Board”).

5.2 Actions by the Board; Delegation of Authority and Duties; Reliance by Third Parties.

(a) In managing the business and affairs of the Company and exercising its powers, the Board may act through meetings and written consents pursuant to Sections 5.4 and 5.5 and through any Officer to whom authority and duties have been delegated pursuant to Section 5.6.

(b) Any Person dealing with the Company may rely on the authority of any Officer taking any action in the name of the Company authorized by the Board without

inquiry into the provisions of this Agreement or compliance herewith, regardless of whether that action actually is taken in accordance with the provisions of this Agreement.

5.3 Board Composition.

(a) Composition. The Board shall be composed of up to fifteen (15) natural persons (who shall constitute “Managers” within the meaning of Section 18-101 of the Act) (each a “Director”), or such other number of Directors as the Sole Member may determine in its sole discretion in accordance with this Agreement. Notwithstanding the foregoing, no Director in his or her individual capacity shall have the authority to manage the Company or approve matters relating to, or otherwise to bind the Company. Such powers are reserved to the Directors acting through the Board or to the Sole Member, as applicable, or to committees of the Board, or Officers or agents of the Company, as may be designated by the Board or the Sole Member, in each case, in accordance with this Agreement. The Directors shall be appointed by the Sole Member, and the Directors immediately after the Closing Time shall be the same Persons serving as Directors immediately prior to the Closing Time.

(b) Committees.

(i) The Board may establish committees of the Board and may delegate any of its responsibilities, except as otherwise prohibited by applicable law, to such committees; provided, that except for the Conflicts Committee, the Audit Committee or as otherwise required by applicable law, the rules and regulations of the Commission, the New York Stock Exchange or any other National Securities Exchange on which any Equity Interests in the Partnership are listed, the Board shall appoint Directors to such committees.

(ii) The Board shall have an audit committee (the “Audit Committee”) comprised of directors who meet the independence standards required of directors who serve on an audit committee of a board of directors established by the Exchange Act and by the New York Stock Exchange or any National Securities Exchange on which any Equity Interests in the Partnership are listed. The Audit Committee shall establish a written audit committee charter in accordance with the rules and regulations of the New York Stock Exchange or any other National Securities Exchange on which any Equity Interests in the Partnership are listed and the Commission, as amended from time to time.

(iii) The Board shall have a Conflicts Committee (the “Conflicts Committee”) composed entirely of two (2) or more Independent Directors.

(iv) The Board may have a compensation committee (the “Compensation Committee”). The Compensation Committee may be charged with such matters pertaining to the compensation of Directors, Officers and other personnel of the Company, the review, approval and administration of any employee compensation, benefit or incentive plan of the Company or any Partnership Group Company, and such other related matters as may be directed by the Board from time to time.

(v) A majority of any committee, present in person or participating in accordance with Section 5.5, shall constitute a quorum for the transaction of business of such committee.

(vi) A majority of any committee may determine its action and fix the time and place of its meetings unless the Board shall otherwise provide. Notice of such meetings shall be given to each committee member reasonably in advance of the meeting. The Board shall have power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee.

(c) Removal; Vacancies. No Director may be removed from the Board except at the written direction of the Sole Member. A Director may resign at any time, such resignation to be made in writing and delivered to the CEO and the Secretary of the Company and to take effect immediately upon such delivery or on such later date as may be specified therein. Any vacancy shall be filled by a designee appointed by the Sole Member.

5.4 Board Meetings; Quorum; Vote Required.

(a) Meetings. The Board shall meet at the offices of the Company (or such other place as determined by the Board). Special meetings of the Board, to be held at the offices of the Company (or such other place as shall be determined by the Board or reasonably requested by the Sole Member), shall be called at the direction of the Sole Member or the Chairman of the Board, upon reasonable advance notice, but in any event upon not less than twenty-four (24) hours’ prior written notice, to all Directors. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting, except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the ground that such meeting is not properly called or convened. The reasonable costs and expenses incurred by the Directors in connection with any meeting of the Board shall be borne and paid by the Company (and any Director may obtain reimbursement from the Company for any such reasonably documented costs and expenses). For purposes of any notice required to be provided under this Section 5.4(a), the term “written notice” shall be deemed satisfied under this Agreement by use of e-mail and other forms of electronic communications to a confirmed e-mail address of an applicable Director.

(b) Quorum. The presence of a majority of all Directors shall be necessary to constitute a quorum for the transaction of business at any meeting of the Board.

(c) Board Voting. On all matters requiring the vote or action of the Board, each Director shall be entitled to one (1) vote, and all actions undertaken by the Board must be authorized by the affirmative vote of at least a majority of Directors at any meeting at which a quorum is present.

(d) Chairman of the Board. The Chairman of the Board (the “Chairman of the Board”) shall preside at meetings of the Board and shall perform such other duties as the Board may from time to time determine. If the Chairman of the Board is not present at a meeting of the Board, another Director chosen by the Board or the Chairman of the Board

shall preside. The Chairman of the Board shall be chosen by the Board from among the Directors.

5.5 Action by Written Consent or Telephone Conference. Any action permitted or required by the Act, the Delaware Certificate or this Agreement to be taken at a meeting of the Board or any committee thereof may be taken without a meeting if a consent in writing or by electronic transmission, setting forth the action to be taken, is signed, in writing or by electronic transmission, by all the Directors entitled to vote thereon. Such consent shall have the same force and effect as a unanimous vote at a meeting and may be stated as such in any document or instrument filed with the Secretary of State, and the execution of such consent shall constitute attendance or presence in person at a meeting of the Board or any committee thereof. Subject to the requirements of the Act, the Delaware Certificate or this Agreement for notice of meetings, the Directors may participate in and hold a meeting of the Board or any committee thereof by means of a telephone conference or similar communication method by means of which all Persons participating in the meeting can hear each other, and participation in such meeting shall constitute attendance and presence in person at such meeting, except where a Person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened or is not called or convened in accordance with this Agreement.

5.6 Officers.

(a) The Officers shall be appointed as provided in this Section 5.6 and shall include a Chief Executive Officer (the “CEO”), and a Chief Financial Officer (the “CFO”), and may include a President (the “President”), a Chief Operations Officer (the “COO”), a Secretary (the “Secretary”), a Treasurer (the “Treasurer”), one or more Vice Presidents (including one or more Executive or Senior Vice Presidents, each a “Vice President”), and such other Officers with such titles and responsibilities as the Board may from time to time determine. In its discretion, the Board may choose not to fill any office for any period as it may deem advisable. Any two or more offices may be held by the same Person, and Officers need not be employees of the Company. Any CEO shall be appointed by the Board. The CEO may nominate other potential officers of the Company, subject to the Board’s confirmation and approval (exercisable in the sole discretion of the Board), and any such potential officer of the Company shall become an Officer upon receipt of such Board confirmation and approval. Each Officer shall hold office until a successor is duly elected and qualified or until the earlier of his or her death, resignation or removal as hereinafter provided. Any Officer may be removed at any time by the Board. Any vacancy occurring in any office of an Officer because of death, resignation, removal, disqualification or otherwise, may be filled by the Board. In the case of the absence or disability of any Officer and of any Person hereby authorized to act in such Officer’s place during such Officer’s absence or disability, the Board may by resolution delegate the powers and duties of such Officer to any other Officer, or to any other Person whom it may select. Subject to (i) Section 5.7, (ii) any limitations, restrictions or directions provided for in this Agreement or by the Board or the Sole Member and (iii) the general oversight of the Board, the CEO and other Officers shall have, in a manner consistent with the management and control granted to officers of a corporation under the laws of the State of Delaware, full and complete discretion

to manage and control the day-to-day business, operations and affairs of the Company in the ordinary course of its business, to make all decisions affecting the day-to-day business, operations and affairs of the Company in the ordinary course of its business and to take all such actions as they deem necessary or appropriate to accomplish the foregoing.

(b) The Officers immediately after the Closing Time shall be the same Persons serving as Officers immediately prior to the Closing Time.

(c) Subject to the general oversight of the Board and any restrictions, limitations or directions provided for in this Agreement, and except as may otherwise be determined by the Board (or, to the extent provided herein, the Sole Member), the duties and responsibilities of the Officers shall be as follows:

(i) CEO. The CEO shall have general and active management and control of the business and affairs of the Company, subject to the control of the Board, and shall see that all orders and resolutions of the Board are carried into effect, and shall perform all other duties incident to such office. The CEO shall be the chief operating officer of the Company (unless a COO is appointed), with general responsibility for the management and control of the operations of the Company.

(ii) CFO. The CFO shall have general and active management and control of the financial affairs of the Company, subject to the control of the CEO and the Board.

(iii) COO. The COO, if any, shall have general and active management and control of the operations of the Company, subject to the control of the CEO and the Board.

(iv) Vice Presidents. Vice Presidents, if any, in order of their seniority or in any other order determined by the Board, shall generally assist the CEO, the CFO and the COO, if any, and perform such other duties as the Board or the CEO shall prescribe.

(v) The Secretary. The Secretary, if any, shall, to the extent practicable, attend all meetings of the Board and all meetings of the Members and shall record all votes and the minutes of all proceedings in a book to be kept for that purpose, and shall perform the same duties for any committee of the Board when so requested by such committee. The Secretary shall give or cause to be given notice of all meetings of the Members and of the Board, shall perform such other duties as may be prescribed by the Board or the CEO and shall act under the supervision of the CEO, the CFO or COO. The Secretary shall keep in safe custody the seal of the Company, if any, and affix the same to any instrument that requires that the seal be affixed to it and which shall have been duly authorized for signature in the name of the Company and, when so affixed, the seal shall be attested by his signature or by the signature of the Treasurer. The Secretary shall keep in safe custody the certificate books and Member records and such other books and records of the Company as the Board or the CEO may direct and shall perform all other duties incident to the office of Secretary and such other duties as from time to time may be assigned by the Board, the CEO, the CFO or the COO.

(vi) The Treasurer. The Treasurer, if any, shall have the care and custody of all the funds of the Company and shall deposit such funds in such banks or other depositories as the Board, or any Officer(s) or any Officer and agent jointly, duly authorized by the Board, shall, from time to time, direct or approve. The Treasurer shall disburse the funds of the Company under the direction of the Board, the CEO, the CFO and the COO. The Treasurer shall keep a full and accurate account of all moneys received and paid on account of the Company and shall render a statement of accounts whenever the Sole Member, the Board, the CEO, the CFO or the COO shall so request and shall perform such other duties incident to the office of Treasurer and such other duties as from time to time may be assigned by the Board, the CEO, the CFO or the COO.

(d) The Officers, in the performance of their duties as such, shall owe to the Company duties of loyalty and due care of the type owed by the officers of a corporation to such corporation and its stockholders under the laws of the State of Delaware.

5.7 Actions Controlled by the Sole Member.

(a) Notwithstanding anything in this Agreement to the contrary, the Sole Member shall have exclusive authority (i) over the business and affairs of the Company that do not relate to management and control of the Partnership Group Companies and (ii) to cause the Company to exercise the rights of the Company as general partner of the Partnership (or those exercisable after the Company ceases to be the general partner of the Partnership) where (a) the Company makes a determination or takes or declines to take any other actions in its individual capacity under the Partnership Agreement or (b) the Partnership Agreement permits the Company to make a determination or take or decline to take any other action “in its sole discretion” or “at its option” or some variation of those phrases. In addition to, in furtherance of and without limiting the foregoing, the Board shall have no authority to cause or permit the Company or any of its Subsidiaries or Minority Subsidiaries, including the Partnership Group Companies, as applicable, or to authorize or permit any Officer or agent of the Company on behalf of the Company or any of its Subsidiaries or Minority Subsidiaries, including the Partnership Group Companies, as applicable, to take, consent to or approve any of the actions described in this Section 5.7, which actions shall be exclusively determined and controlled by the Sole Member on behalf of the Company or any of its Subsidiaries and Minority Subsidiaries, as applicable:

(i) exercise or waive any rights, or make any election, with respect to the Incentive Distribution Rights under the Partnership Agreement, including any “IDR Reset Election”, or transfer, sell, distribute, encumber, pledge, impair, alter, convert or amend any Incentive Distribution Right;

(ii) transfer, sell, distribute, encumber, pledge, hypothecate or impair any Equity Interests held directly by the Company;

(iii) permit or cause the Company to (A) voluntarily withdraw from the Partnership, (B) vote in favor of the Company’s withdrawal or removal from the Partnership

or (C) select, appoint or vote in favor of any general partner of the Partnership other than the Company;

(iv) other than drawings under any credit facility then in place (and previously approved by the Sole Member), permit or allow the Company to (A) incur any Indebtedness, assume any Indebtedness of, or guarantee or otherwise become responsible for the obligations of, any Person (other than liability of the Company for obligations of the Partnership (and any other Subsidiary or Minority Subsidiary of the Company of which it is the general partner) solely by virtue of the Company’s status as general partner) or (B) create any Lien on assets or properties of the Company (including Equity Interests) other than Permitted Liens;

(v) effect, cause, approve or vote in favor of any recapitalization, restructuring or reorganization of the Company;

(vi) alter, repeal, waive, amend, terminate, supplement or adopt any provision of this Agreement or the Delaware Certificate;

(vii) voluntarily approve, commence or take any action to effectuate or that would result in a Bankruptcy Event with respect to the Company;

(viii) effect any merger, consolidation or other similar business combination of, or any sale of all or substantially all of the assets (including Equity Interests of any Partnership Group Company) of, the Company;

(ix) approve or admit any member, other than the Sole Member, to the Company or authorize, issue, sell, dispose of, transfer, dividend, distribute, redeem, convert, exchange, purchase, repurchase, cancel, retire, or fix designations, preferences rights, powers, duties or other terms or conditions of any Equity Interests of the Company, phantom equity or similar rights or interests of the Company or any warrants, options or other similar rights or interests or securities convertible into or exchangeable for any such Equity Interests, phantom equity or similar rights;

(x) adopt or amend any employee compensation, benefit or incentive plan of the Company relating to the provision of services by any individual (including any employee, Officer, seconded employee, independent contractor or service provider) to the Company in connection with its business and affairs that do not relate to the management and control of the Partnership Group Companies;

(xi) determine or change the distribution policy of the Company;

(xii) permit, cause or require the Company to accept or require a capital contribution from any Person;

(xiii) make any material tax election or determination with respect to the Company or take, or cause or permit the Company to take, any other material action with respect to taxes, including causing or permitting the Company to be classified as other than

a partnership or an entity disregarded as separate from its owner, as applicable, for federal income tax purposes;

(xiv) permit the Company to engage in any significant business or activity outside the scope of the Business or otherwise permit or effect any material change in the business lines of the Company;

(xv) create or form any Subsidiary or Minority Subsidiary of the Company that is not a Partnership Group Company;

(xvi) permit the Company to purchase or otherwise acquire all or any part of the business or assets of, or Equity Interests in, or invest in or extend credit (other than trade credit in the ordinary course) or make any loan or capital contribution to, or participate in any joint venture, partnership or similar arrangement with, any Person (other than the Company’s two percent (2%) general partner interest and Incentive Distribution Rights in the Partnership);

(xvii) (A) make any interpretation or determination with respect to the exercise of material rights of any limited partner of the Partnership pursuant to the Partnership Agreement (including with respect to requests for material information), (B) interpret or determine the eligibility of, or grant any rights to, any holder of Equity Interests of the Partnership to vote or exercise similar rights under the Partnership Group Governing Documents with respect to such Equity Interests, including any determination under the Partnership Agreement to permit any acquirer of twenty percent (20%) or more of the Equity Interests issued by the Partnership to vote with respect to such Equity Interests, or (C) make any interpretation or determination of eligibility of, or with respect to any restriction on, any transfer of Equity Interests of the Partnership under the Partnership Group Governing Documents, in each case of the forgoing clauses (A) - (C), solely to the extent such limited partner, holder or transferor of Equity Interests is (X) a current or former Affiliate of the Sole Member or (Y) directly or indirectly (including through a series of direct or indirect transfers to one or more other Persons) received the Equity Interests that are the subject of any such interpretation or determination from any current or former Affiliate of the Sole Member (other than the Partnership and its Subsidiaries) following notice of each such transfer to the Company; provided, that the foregoing will not apply to ministerial actions;

(xviii) permit or cause any Partnership Company to take any action that purports to bind the Sole Member and/or its direct or indirect equity holders;

(xix) vote any Equity Interests of the Partnership owned by the Company, other than the general partner interest held by the Company, with respect to any material matter; or

(xx) vote in favor or approve of or agree, cause or commit to do any of the foregoing.

(b) Notwithstanding anything herein to the contrary, the Board will not take any action without approval of the Sole Member with respect to an extraordinary matter that would have, or would reasonably be expected to have, a material effect, directly or indirectly, on the Sole Member’s interests in the Company. The type of extraordinary matter referred to in the prior sentence which requires approval of the Sole Member shall include, but not be limited to, the following:

(i) commencement of any action relating to bankruptcy, insolvency, reorganization or relief of debtors by a material Subsidiary of the Company;

(ii) a merger, consolidation, recapitalization or similar transaction involving the Partnership or a material Subsidiary thereof;

(iii) a sale, exchange or other transfer not in the ordinary course of business of a substantial portion of the assets of the Partnership or a material Subsidiary of the Partnership, viewed on a consolidated basis, in one or a series of related transactions;

(iv) dissolution or liquidation of the Partnership; and

(v) a material amendment of the Partnership Agreement.

5.8 Limitation of Duties and Corporate Opportunities.

(a) Whenever the Directors (in their capacity as Directors), make a determination or cause the Company to take or decline to take any other action relating to the management and control of the Partnership Group Companies for which the Company is required to act in good faith under the Partnership Agreement, then the Directors shall make such determination or cause the Company to take or decline to take such other action in good faith and shall not be subject to any other or different standards (including fiduciary standards) imposed by this Agreement, the Partnership Agreement, any other agreement contemplated hereby or under the Act or any other law, rule or regulation or at equity. In order for a determination or other action to be in “good faith” for purposes of this Section 5.8(a), the Director must believe that the determination or other action is in the best interests of the Partnership.

(b) Whenever the Directors (in their capacity as Directors), make a determination or cause the Company to take or decline to take any other action in any circumstance not described in Section 5.8(a), then unless another express standard is provided for in this Agreement or the Partnership Agreement, the Directors shall make such determination or cause the Company to take or decline to take such other action in the belief that the determination or other action is in the best interest of the Sole Member and to the fullest extent permitted by law, shall not otherwise be subject to any other or different standards (including fiduciary standards) or owe any fiduciary or similar duty or obligation whatsoever to the Company or the other Directors.

(c) Subject to applicable law, each Director and the Sole Member and its Affiliates (other than the Company and its Subsidiaries and Minority Subsidiaries), shall be

free to engage or invest in, and devote its and their time to, any other business venture or activity of any nature and description, whether or not such activities are considered competitive with the Company, and neither the Company nor any other Person will have any right by virtue of this Agreement or the relationship created hereby in or to such other venture or activity of any Person (or to the income or proceeds derived therefrom), and the pursuit of such other venture or activity will not be deemed wrongful or improper and, except as otherwise expressly provided in any other contract or agreement to which it or any of its Affiliates is or may in the future be party, no notice, approval or other sharing of any such other opportunity or activity will be required and the legal doctrines of “corporate opportunity,” “business opportunity” and similar doctrines will not be applied to any such competitive venture or activity.

5.9 Preemptive Rights under Partnership Agreement. In connection with any issuance by the Partnership of Partnership Interests (as defined in the Partnership Agreement), the Company shall assign its preemptive rights under Section 5.8 of the Partnership Agreement, as and to the extent directed by the Sole Member, to any Person designated by the Sole Member to whom such preemptive rights may be assigned under Section 5.8 of the Partnership Agreement.

5.10 Certificating Equity Interests in the Partnership. Upon the request and at the direction of the Sole Member, the Company shall cause the Partnership to issue certificates representing any outstanding Partnership Interests (as defined in the Partnership Agreement), identified by the Sole Member, subject to and in accordance with the terms of the Partnership Agreement.

ARTICLE VI
BOOKS AND RECORDS

6.1 Books and Records. The Company shall keep or cause to be kept at the principal office of the Company appropriate books and records with respect to the Company’s business.

ARTICLE VII
[INTENTIONALLY OMITTED]

ARTICLE VIII
EXCULPATION AND INDEMNIFICATION

8.1 Performance of Duties; No Liability of the Sole Member, Directors and Officers. Neither the Sole Member nor any Director (in their respective capacities as such) shall have any duty to the Company and no Director shall have any duty to the Sole Member except as expressly set forth herein or in other agreements to which such Persons are party or as required by applicable law. None of the Sole Member or any Director or Officer (in their respective capacities as such) shall be liable to the Company, and no Director or Officer (in their respective capacities as such) shall be liable to the Sole Member, for any loss or damage sustained by the Company or the Sole Member (as applicable), unless such loss or damage shall (as finally determined by a court of competent jurisdiction) have resulted from such Person’s fraud, intentional misconduct or, in the case of the Sole Member, willful breach of this Agreement or, in the case of any Director or Officer, knowing and intentional breach of this Agreement or, in the case of an Officer, breach of such

Person’s duties pursuant to Section 5.6(d). In performing such Person’s duties, each such Person shall be entitled to rely in good faith on the provisions of this Agreement and on information, opinions, reports or statements (including financial statements and information, opinions, reports or statements as to the value or amount of the assets, liabilities, profits or losses of the Company or any facts pertinent to the existence and amount of assets from which distributions to the Sole Member might properly be paid) of the following other Persons or groups: one or more Officers or employees of the Company, any attorney, independent accountant, appraiser or other expert or professional employed or engaged by or on behalf of the Company; or any other Person who has been selected with reasonable care by or on behalf of the Company, in each case as to matters which such relying Person reasonably believes to be within such other Person’s competence. The preceding sentence shall in no way limit any Person’s right to rely on information to the extent provided in Section 18-406 of the Act. None of the Sole Member, any Director or any Officer shall be personally liable under any judgment of a court, or in any other manner, for any debt, obligation or liability of the Company, whether that liability or obligation arises in contract, tort or otherwise, solely by reason of being the Sole Member, Director or Officer or any combination of the foregoing. Nothing in this Agreement shall limit the liabilities and obligations of the Sole Member under, or entitle the Sole Member to indemnification hereunder from the Company with respect to any claims made under, any other contract or agreement or when acting in any capacity for or on behalf of the Company other than those expressly described above.

8.2 Right to Indemnification. Subject to the limitations and conditions as provided in this ARTICLE VIII, each Person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or arbitrative or in the nature of an alternative dispute resolution in lieu of any of the foregoing (“Proceeding”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, by reason of the fact that such Person, or a Person of which such Person is the legal representative, is or was a Member, a Director or Officer or, in each case, a representative thereof shall be indemnified by the Company to the fullest extent permitted by applicable law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said law permitted the Company to provide prior to such amendment) against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including, without limitation, reasonable attorneys’ and experts’ fees) actually incurred by such Person in connection with such Proceeding, appeal, inquiry or investigation (“Loss”), unless (a) such Loss shall have been finally determined by a court of competent jurisdiction to have resulted from such Person’s fraud, intentional misconduct or, in the case of the Sole Member, willful breach of this Agreement or, in the case of any Director or Officer, knowing and intentional breach of this Agreement or (b) in the case of an Officer, such Loss shall have been finally determined by a court of competent jurisdiction to have resulted from such Person’s failure to act in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company or other failure to comply with such Officer’s duties pursuant to Section 5.6(d), or such Officer had reasonable cause to believe his or her conduct was unlawful. Indemnification under this ARTICLE VIII shall continue as to a Person who has ceased to serve in the capacity which initially entitled such Person to indemnity hereunder. The rights granted pursuant to this ARTICLE VIII, including the rights to advancement granted under Section 8.3, shall be

deemed contract rights, and no amendment, modification or repeal of this ARTICLE VIII shall have the effect of limiting or denying any such rights with respect to actions taken or Proceedings, appeals, inquiries or investigations arising prior to any amendment, modification or repeal. The foregoing indemnification is for the benefit of the Persons identified above acting in the capacities described above and not in any other capacity. The Persons identified above must first seek recovery under any other indemnity or any insurance policies provided by or for the benefit of the Partnership or its Subsidiaries or Minority Subsidiaries (or their respective directors, officers, employees, agents or representatives) by which such Persons are indemnified or covered, as the case may be, but only to the extent that the indemnitor with respect to such indemnity or the insurer with respect to such insurance policy provides (or acknowledges its obligation to provide) such indemnity or coverage on a timely basis, as the case may be. In the event of indemnification under this ARTICLE VIII, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Persons identified above, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.

8.3 Advance Payment. The right to indemnification conferred in this ARTICLE VIII shall include the right to be paid or reimbursed by the Company for the reasonable expenses incurred by a Person (other than an Officer in respect of claims by the Company against such Officer in such Officer’s capacity as such) entitled to be indemnified under Section 8.2 who was, or is threatened to be made, a named defendant or respondent in a Proceeding in advance of the final disposition of the Proceeding and without any determination as to the Person’s ultimate entitlement to indemnification; provided, however, that the payment of such expenses incurred by any such Person in advance of the final disposition of a Proceeding shall be made only upon delivery to the Company of a written affirmation by such Person of his or her good faith belief that he has met the standard of conduct necessary for indemnification under this ARTICLE VIII and a written undertaking, by or on behalf of such Person, to repay all amounts so advanced if it shall ultimately be determined that such indemnified Person is not entitled to be indemnified under this ARTICLE VIII or otherwise.

8.4 Indemnification of Employees and Agents. The Company, at the direction of the Board, may indemnify and advance expenses to an employee or agent of the Company to the same extent and subject to the same conditions under which it may indemnify and advance expenses under Sections 8.2 and 8.3.

8.5 Appearance as a Witness. Notwithstanding any other provision of this ARTICLE VIII, the Company may pay or reimburse reasonable out-of-pocket expenses incurred by the Sole Member or any Director, Officer, employee or agent of the Company in connection with his appearance as a witness or other participation in a Proceeding at a time when he is not a named defendant or respondent in the Proceeding.

8.6 Nonexclusivity of Rights. The right to indemnification and the advancement and payment of expenses conferred in this ARTICLE VIII shall not be exclusive of any other right that the Sole Member or any Director, Officer, employee or agent of the Company or other Person indemnified pursuant to this ARTICLE VIII may have or hereafter acquire under any law (common or statutory) or provision of this Agreement or any other contract or agreement.

8.7 Insurance. The Board may, and at the request of the Sole Member shall, obtain and maintain, at the Company’s or a Partnership Group Company’s expense, insurance to protect the Sole Member, Directors, Officers, employees and agents of the Company from any expense, liability or loss arising out of or in connection with such Person’s status and actions as the Sole Member, Director, Officer, employee or agent of the Company. In addition, the Board may, and at the request of the Sole Member shall, cause the Company to purchase and maintain insurance, at the Company’s expense, to protect the Company, the Sole Member, and any Director, Officer, employee or agent of the Company who is or was serving at the request of the Company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of a foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such Person against such expense, liability or loss under this ARTICLE VIII.

8.8 Savings Clause. If this ARTICLE VIII or any portion hereof shall be invalidated on any ground by any court or other Governmental Authority of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless each Person indemnified pursuant to this ARTICLE VIII as to costs, charges and expenses (including reasonable attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any such Proceeding, appeal, inquiry or investigation to the full extent permitted by any applicable portion of this ARTICLE VIII that shall not have been invalidated and to the fullest extent permitted by applicable law.

8.9 Survival. The provisions of this ARTICLE VIII shall survive the termination or amendment of this Agreement and are intended to be for the benefit of, and shall be enforceable by, the Persons referred to in this ARTICLE VIII and their respective successors, heirs and assigns, notwithstanding any provision of Section 11.3 to the contrary.

ARTICLE IX
DISSOLUTION, LIQUIDATION AND TERMINATION

9.1 Dissolution. The Company will dissolve and its affairs will be wound up only upon the consent of the Sole Member.

9.2 Liquidation and Termination. On dissolution of the Company, the Sole Member may appoint one or more other Persons as liquidator(s). The liquidator will proceed diligently to wind up the affairs of the Company and liquidate the Company’s assets and make final distributions as provided herein. The costs of liquidation will be borne as an expense of the Company. Until final distribution, the liquidator will continue to operate the Company properties with all of the power and authority of the Sole Member. Subject to Section 18-804 of the Act, the steps to be accomplished by the liquidator are as follows:

(a) Accounting. As promptly as possible after dissolution and again after final liquidation, the liquidator will cause a proper accounting to be made by a recognized firm of certified public accountants of the Company’s assets, liabilities and operations through the last day of the calendar month in which the dissolution occurs or the final liquidation is completed, as applicable;

(b) Payments. The liquidator will pay from Company funds all of the debts and liabilities of the Company (including all expenses incurred in liquidation) or otherwise make adequate provision therefor (including the establishment of a cash escrow fund for contingent liabilities in such amount and for such term as the liquidator may reasonably determine); and

(i) the liquidator may sell any or all Company property, and any resulting gain or loss from each sale will be computed and allocated to the Sole Member; and

(ii) thereafter, Company property will be distributed to the Sole Member in accordance with Section 4.1(a).

(d) Distributions. All distributions in kind to the Sole Member will be made subject to the liability for costs, expenses and liabilities theretofore incurred or for which the Company has committed prior to the date of termination and those costs, expenses and liabilities will be allocated to the Sole Member pursuant to this Section 9.2.

(e) Cancellation of Filing. On completion of the distribution of Company assets as provided herein, the Company will be terminated, and the Board (or such other Person or Persons as may be required) will cause the cancellation of any other filings made as provided in Section 1.6 and will take such other actions as may be necessary to terminate the Company.

9.3 Effect of Incapacity. Except as otherwise provided herein, the Incapacity of the Sole Member shall not dissolve or terminate the Company. In the event of such Incapacity, the executor, administrator, guardian, trustee or other personal representative of the Sole Member shall be deemed to be the assignee of the Sole Member’s Membership Interest and may, subject to the terms and conditions set forth in this ARTICLE IX, become a Substitute Member.

ARTICLE X
DEFINITIONS

10.1 Definitions. As used in this Agreement, the following terms have the following meanings:

“Act” has the meaning set forth in the Recitals hereto.

“Affiliate” means any Person that is a Subsidiary of, or directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with, the Person in question.

“Agreement” means this Eighth Amended and Restated Limited Liability Company Agreement, as executed and as it may be amended, modified, supplemented or restated from time to time, as the context requires.

“Audit Committee” has the meaning set forth in Section 5.3(b)(ii).

“Bankruptcy Event” means, with respect to any Person, the occurrence of one or more of the following events: (a) such Person (i) admits in writing its inability to pay its debts as they become due, (ii) files, consents or acquiesces by answer or otherwise to the filing against it of a petition for relief or reorganization or rearrangement, readjustment or similar relief or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, dissolution, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as bankrupt or as insolvent or to be liquidated, (vi) gives notice to any Governmental Authority of insolvency or pending insolvency, or (vii) takes corporate action for the purpose of any of the foregoing; or (b) a court or Governmental Authority of competent jurisdiction enters an order appointing, without consent by such Person, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of such Person, or a petition or involuntary case with respect to any of the foregoing shall be filed or commenced against such Person.

“Board” has the meaning set forth in Section 5.1.

“Business” has the meaning set forth in Section 1.9.

“CEO” has the meaning set forth in Section 5.6(a).

“Certificate of Limited Partnership” means the Certificate of Limited Partnership of Williams Partners, L.P. filed on January 21, 2010, as amended on July 23, 2012, and February 2, 2015 and as may be further amended from time to time.

“CFO” has the meaning set forth in Section 5.6(a).

“Chairman of the Board” has the meaning set forth in Section 5.4(d).

“Closing Date” has the meaning set forth in the Preamble hereto.

“Closing Time” has the meaning set forth in the Preamble hereto.

“Code” means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law).

“Commission” means the United States Securities and Exchange Commission.

“Company” has the meaning set forth in the Preamble hereto.

“Compensation Committee” has the meaning set forth in Section 5.3(b)(iv).

“Conflicts Committee” has the meaning set forth in Section 5.3(b)(iii).

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

“COO” has the meaning set forth in Section 5.6(a).

“Delaware Certificate” has the meaning set forth in the Recitals hereto.

“Director” or “Directors” has the meaning set forth in Section 5.3(a).

“Equity Interests” means all shares, capital stock, partnership or limited liability company interests, units, participations, distribution rights or similar equity interests issued by any Person, however designated.

“Exchange Act” means the Securities Exchange Act of 1934, as amended and the rules and regulations of the Commission promulgated thereunder.

“Fiscal Year” has the meaning set forth in Section 1.5.

“GAAP” has the meaning set forth in Section 6.2(a).

“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States of America, the United States of America or a foreign entity or government.

“Incapacity” means with respect to any Person, the bankruptcy (as defined in the Act), liquidation, dissolution or termination of such Person.

“Incentive Distribution Right” has the meaning set forth in the Partnership Agreement.

“Indebtedness” means, with respect to any specified Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for a deferred purchase price (other than trade payables incurred in the ordinary course of such Person’s business, consistent with past practice), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person under capital leases, (e) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, whether or not drawn, (f) all obligations of such Person created or arising under any conditional sale or title retention agreement, (g) the liquidation value or redemption price, as the case may be, of all preferred or redeemable stock of such Person, (h) all net obligations of such Person payable under any rate, currency, commodity or other swap, option or derivative agreement, (i) all obligations secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be

secured by) any Lien (other than a Permitted Lien) on property owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation and (j) all obligations of others guaranteed by such Person.

“Independent Director” means a Director qualified to serve on the “Conflicts Committee” defined in the Partnership Agreement in accordance with the terms of the Partnership Agreement.

“Liens” means any mortgage, pledge, assessment, security interest, lease, lien, adverse claim, levy, charge, right of first refusal or other encumbrance of any kind, or any conditional sale contract, title retention contract or other contract or agreement to give any of the foregoing.

“Loss” has the meaning set forth in Section 8.2.

“Member” means the Sole Member and each Person who is hereafter admitted as a Member in accordance with the terms of this Agreement and the Act, in each case so long as such Person is shown on the Company’s books and records as the owner of any Membership Interests. The Members shall constitute the “members” (as that term is defined in the Act) of the Company.

“Membership Interest” means a Member’s ownership interest in the Company, including such Member’s right to share in distributions, profits and losses and the right, if any, to participate in the management of the business and affairs of the Company, including the right, if any, to vote on, consent to or otherwise participate in any decision or action of or by the Members, the right to designate Directors to the Board, and the right to receive information concerning the business and affairs of the Company, in each case to the extent expressly provided in this Agreement or otherwise required by the Act.

“Minority Subsidiary” means any Person whose Equity Interests are owned, held or Controlled directly or indirectly by another Person, but who is not a Subsidiary of such other Person.

“National Securities Exchange” has the meaning set forth in the Partnership Agreement.

“Officer” means each Person designated as an officer of the Company pursuant to Section 5.6 for so long as such Person remains an Officer pursuant to the provisions of Section 5.6.

“Partnership” has the meaning set forth in Section 1.9.

“Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of August 3, 2010, as amended by Amendment No. 1, dated as of July 24, 2012, Amendment No. 2, dated as of December 20, 2012, Amendment No. 3, dated as of January 29, 2014, and Amendment No. 4, dated as of February 2, 2015, and Amendment No. 5, dated as of June 10, 2015, and Amendment No. 6, dated as of September 28,2015, and as may be further amended from time to time.

“Partnership Group Companies” has the meaning set forth in Section 1.9.

“Partnership Group Governing Documents” means the Partnership Agreement, Certificate of Limited Partnership or any similar organizational or governing documents of any of

the Company’s Subsidiaries or Minority Subsidiaries (including any operating agreement, membership agreement, certificate of formation, partnership agreement, certificate of incorporation or bylaws).

“Permitted Lien” means (i) Liens for Taxes not yet due and payable or which are being actively contested in good faith by appropriate proceedings with appropriate reserves therefor; (ii) mechanics’, materialmens’, carriers’, workmens’, warehousemens’, repairmens’, landlords’ or other like Liens and security obligations that are not delinquent; or (iii) matters of record, zoning, building or other restrictions, variances, covenants, rights of way, encumbrances, easements and other minor irregularities in title, in each case, which do not materially interfere with the ordinary conduct of business of the Company and its Subsidiaries and Minority Subsidiaries and do not materially detract from the value or use of the property subject thereto.

“Person” means an individual or a corporation, partnership, limited liability company, trust, estate, unincorporated organization, association, “group” (as such term is defined in Section 13(d) of the Exchange Act) or other entity.

“Proceeding” has the meaning set forth in Section 8.2.

“Secretary” has the meaning set forth in Section 5.6(a).

“Secretary of State” has the meaning set forth in the Recitals hereto.

“Seventh Amended and Restated LLC Agreement” has the meaning set forth in the Recitals hereto.

“Sole Member” has the meaning set forth in the Preamble hereto.

“Subsidiary” means, with respect to any Person (solely for purposes of this definition, the “parent”) at any date, any other Person in which the parent, directly or indirectly, owns Equity Interests that (a) represent more than fifty percent (50%) of the total number of outstanding common or other residual Equity Interests (however denominated) of such Person, (b) represent more than fifty percent (50%) of the total voting power of all outstanding Equity Interests of such Person which are entitled to vote in the election of directors, managers or other Persons performing similar functions for and on behalf of such Person, (c) are entitled to more than fifty percent (50%) of the dividends paid and other distributions made by such Person prior to liquidation, (d) constitute more than fifty percent (50%) of a general partner interest, managing member interest or similar Controlling interest or (e) are entitled to more than fifty percent (50%) of the assets of such Person or proceeds from the sale thereof upon liquidation.

“Substitute Member” means any transferee that has been admitted as a Member of the Company pursuant to this Agreement by virtue of such transferee receiving all or a portion of a Member’s Membership Interests from a Member, provided, however, that each transferee shall only be admitted as a Substitute Member if such transferee first (i) becomes a party to this Agreement by executing a joinder or counterpart signature page to this Agreement and executing such other documents and instruments as the Company may reasonably request for the sole purpose of confirming such transferee’s admission as a Substitute Member and (ii) pays or reimburses the

Company for all reasonable costs incurred in connection with the admission of the transferee as a Substitute Member.

“Treasurer” has the meaning set forth in Section 5.6(a).

“Vice President” has the meaning set forth in Section 5.6(a).

10.2 Construction. Whenever the context requires, (a) the gender of all words used in this Agreement includes the masculine, feminine, and neuter, (b) words using the singular or plural number also include the plural or singular number, respectively and (c) terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this Agreement, and such words do not refer to the Act or any particular section, clause or provision of this Agreement. All references to a Person include such Person’s successors and permitted assigns. All references to Articles and Sections refer to articles and sections of this Agreement, and all references to Exhibits are to exhibits attached hereto, each of which is made a part hereof for all purposes. The use herein of the word “include” or “including,” when following any general statement, term or matter, will not be construed to limit such statement, term or matter to the specific items or matters set forth following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather will be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. Unless the context otherwise requires, the term “or” is not exclusive and has the inclusive meaning conveyed by the phrase “and/or”. The phrases “directly or indirectly” or “direct or indirect,” when used in the context of ownership, holdings, Control, transfer or the taking of any action, includes ownership, holdings, Control, transfer or the taking of such action, as applicable, through a chain of direct or indirect ownership of Equity Interests or Control of one or more Persons (for the avoidance of doubt, including in the case of the Partnership, ownership, holdings, Control or transfers of, or the taking of actions through or the Company). References to any contract or agreement, include that contract or agreement as amended, supplemented or restated to the extent such amendment, supplement or restatement was not done in violation of the terms of this Agreement. The definitions set forth or referred to in Section 10.1 will apply equally to both the singular and plural forms of the terms defined and derivative forms of defined terms will have correlative meanings. Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision will be applicable whether such action is taken directly or indirectly by such Person, including actions taken by or on behalf of any Affiliate of such Person. Without modifying or affecting the interpretation of any obligation in any other context, any obligation hereunder solely with respect to any action, obligation, covenant or agreement relating to any Minority Subsidiary shall only require the direct or indirect owner, holder or Controller of Equity Interests in such Minority Subsidiary to use commercially reasonable efforts to exercise any available rights in respect of such action, obligation, covenant or agreement such holder may have in connection with its direct or indirect ownership, holdings or Control of Equity Interests in such Minority Subsidiary under the organizational, governance, voting, management or similar documents of such Minority Subsidiary. All accounting terms used herein and not otherwise defined herein will have the meanings accorded them in accordance with GAAP and, except as expressly provided herein, all accounting determinations will be made in accordance with GAAP. The parties acknowledge that this Agreement has been negotiated by such parties with the benefit of counsel and, accordingly, any principle of law that provides that any ambiguity in a

contract or agreement shall be construed against the party that drafted such contract or agreement shall be disregarded and is expressly waived by all of the parties hereto.

ARTICLE XI
MISCELLANEOUS

11.1 Notices. Except as expressly set forth to the contrary in this Agreement, all notices, requests or consents provided for or permitted to be given under this Agreement must be in writing and must be given either by (a) depositing such writing with a reputable overnight courier for next day delivery, (b) depositing such writing in the United States mail, addressed to the recipient, postage paid, and registered or certified with return receipt requested or (c) delivering writing to the recipient in person, by courier or by facsimile transmission; and a notice, request or consent given under this Agreement is effective upon receipt against the Person who receives it. All notices, requests and consents to be sent to the Sole Member or the Company must be sent to or made at the respective addresses set forth below, or such other address as the Sole Member or the Company, as applicable, may specify. Any notice, request or consent to the Board must be given to the Board or the Secretary, if any, at the Company’s chief executive offices. Whenever any notice is required to be given by law or this Agreement, a written waiver thereof, signed by the Person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.

The Sole Member

The Williams Companies, Inc.
One Williams Center
Tulsa, OK 74171-0172
Attention: Senior Vice President and Chief Financial Officer
Fax: (918) 573-0871

With a copy to:

The Williams Companies, Inc.
One Williams Center
Tulsa, OK 74171-0172
Attention: Secretary
Fax: (918) 573-1807

The Company WPZ GP LLC

One Williams Center

Tulsa, OK 74171-0172

Attention: Chief Financial Officer

Fax: (918) 573-0871

With a copy to:

WPZ GP LLC
One Williams Center
Tulsa, OK 74171-0172
Attention: Secretary
Fax: (918) 573-1807

11.2 Effect of Waiver or Consent. A waiver or consent, express or implied, to or of any breach or default by any Person in the performance by that Person of its obligations hereunder or with respect to the Company is not a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person hereunder or with respect to the Company. Failure on the part of a Person to complain of any act of any Person or to declare any Person in default hereunder or with respect to the Company, irrespective of how long that failure continues, does not constitute a waiver by that Person of its rights with respect to that default until the applicable statute-of-limitations period has run.

11.3 Amendment or Modification. Subject to Section 8.9, this Agreement and any provision hereof may be amended, waived (except as otherwise provided herein), or modified from time to time only by a written instrument signed by the Sole Member.

11.4 Binding Effect. Subject to the restrictions on transfers set forth in this Agreement, this Agreement is binding on and shall inure to the benefit of the Sole Member and its successors and permitted assigns and all other Persons hereafter holding, having or receiving an interest in the Company, whether as transferees, Substitute Members or otherwise. The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns, and it is not the intention of the parties to confer third-party beneficiary rights upon any other Person.

11.5 Governing Law. This Agreement shall be construed in accordance with and governed by the internal laws of the State of Delaware, without regard to the principles of conflicts of law (whether of the State of Delaware or otherwise) that would result in the application of the laws of any other jurisdiction. In the event of a direct conflict between the provisions of this Agreement and any provision of the Delaware Certificate or any mandatory provision of the Act, the applicable provision of the Delaware Certificate or the Act shall control.

11.6 Further Assurances. In connection with this Agreement and the transactions contemplated hereby, the Sole Member shall execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and those transactions.

11.7 Waiver of Certain Rights. The Sole Member irrevocably waives any right it may have to demand any distributions or withdrawal of property from the Company except as provided herein or to maintain any action for dissolution (whether pursuant to Section 18-802 of the Act or otherwise) of the Company or for partition of the property of the Company and confirms that such waivers are a material term of this Agreement.

11.8 Counterparts. This Agreement may be executed in multiple counterparts, any of which may be delivered via facsimile or PDF, with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument.

11.9 Headings. The headings used in this Agreement are for the purpose of reference only and will not otherwise affect the meaning or interpretation of any provision of this Agreement.

11.10 Remedies. The Sole Member shall be entitled to enforce its rights under this Agreement, specifically, to recover damages by reason of any breach of any provision of this Agreement (including costs of enforcement) and to exercise any and all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that the Sole Member may in its or his sole discretion apply to any court of law or equity of competent jurisdiction for specific performance or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation or threatened violation of the provisions of this Agreement.

11.11 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

[Separate Signature Page Attached]

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the Closing Date.

THE WILLIAMS COMPANIES, INC.

By: /s/ Donald R.Chappel

Name: Donald R. Chappel

Title: Chief Financial Officer

WPZ GP LLC

By: /s/ Donald R.Chappel

Name: Donald R. Chappel

Title: Chief Financial Officer

Exhibit 12

Williams Partners L.P.

Computation of Ratio of Earnings to Fixed Charges



	Six Months Ended
	June 30, 2016
	(Millions)
Earnings:
Income (loss) before income taxes	$	(77	)
Less: Equity earnings	(198		)
Income (loss) before income taxes and equity earnings	(275		)
Add:
Fixed charges:
Interest incurred	479
Rental expense representative of interest factor	4
Total fixed charges	483
Distributed income of equity-method investees	383
Less:
Interest capitalized	(19		)
Total earnings as adjusted	$	572
Fixed charges	$	483
Ratio of earnings to fixed charges	1.18

Exhibit 31.1

CERTIFICATIONS

I, Alan S. Armstrong, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Williams Partners L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2016



	/s/ Alan S. Armstrong
	Alan S. Armstrong
	Chief Executive Officer of WPZ GP LLC, general partner of Williams Partners L.P. (Principal Executive Officer)

Exhibit 31.2

CERTIFICATIONS

I, Donald R. Chappel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Williams Partners L.P.;


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2016



	/s/ Donald R. Chappel
	Donald R. Chappel
	Chief Financial Officer of WPZ GP LLC, general partner of Williams Partners L.P. (Principal Financial Officer)

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Williams Partners L.P. (the “Partnership”) on Form 10-Q for the period ending June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned hereby certifies, in his capacity as an officer of WPZ GP LLC (the “Company”), the general partner of the Partnership, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

/s/ Alan S. Armstrong

Alan S. Armstrong

President and Chief Executive Officer

August 2, 2016

/s/ Donald R. Chappel

Donald R. Chappel

Chief Financial Officer

August 2, 2016

A signed original of this written statement required by Section 906 has been provided to, and will be retained by, the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report and shall not be considered filed as part of the Report.

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