Form 8-K/A WILLIAMS PARTNERS L.P. For: Feb 17

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 18, 2016 (February 17, 2016)

Williams Partners L.P.

(Exact name of registrant as specified in its charter)

 

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

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

NOT APPLICABLE

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

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

 

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

 

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

 

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

 

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

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Explanatory Note

This Form 8-K/A amends the Current Report on Form 8-K (the “Form 8-K”), filed by Williams Partners L.P. (the “Partnership”) with the Securities and Exchange Commission (the “SEC”) on February 17, 2016. The Press Release included as Exhibit 99.1 to the Form 8-K included a table titled “Williams Summary Financial Information” which reflected information for The Williams Companies, Inc. rather than financial information for the Partnership. The correct table is included in the Press Release included as Exhibit 99.1 to this Form 8-K/A. The correct table was included in the Press Release carried by Business Wire.

 

Item 2.02.

Results of Operations and Financial Condition.

On February 17, 2016, Williams Partners L.P. (the “Partnership”) issued a press release announcing its financial results for the quarter and year ended December 31, 2015. A copy of the press release and accompanying financial highlights and operating statistics and reconciliation schedules are furnished herewith as Exhibit 99.1 and are incorporated herein in their entirety by reference.

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

 

Item 9.01.

Financial Statements and Exhibits.

 

(a)

None

 

(b)

None

 

(c)

None

 

(d)

Exhibits.

 

Exhibit Number		Description
Exhibit 99.1		Press release of the Partnership dated February 17, 2016 and accompanying schedules, publicly announcing the Partnership’s financial results for the quarter and year ended December 31, 2015.

 

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

 

		WILLIAMS PARTNERS L.P.
		By:		WPZ GP LLC,
				its General Partner
Date: February 18, 2016		By:		/s/ Sarah C. Miller
				Sarah C. Miller
				Senior Vice President and General Counsel

 

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INDEX TO EXHIBITS

 

Exhibit Number		Description
Exhibit 99.1		Press release of the Partnership dated February 17, 2016 and accompanying schedules, publicly announcing the Partnership’s financial results for the quarter and year ended December 31, 2015.

 

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Exhibit 99.1

 

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

 

 

DATE: February 17, 2016

 

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

Williams Partners Reports 2015 Financial Results

 

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4Q Adjusted EBITDA of $1.06 Billion, Up 25% vs. 4Q 2014 on $139 Million in Fee-Based Revenue Growth

 

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4Q DCF of $718 Million, Cash Coverage Ratio of .99x or 1.39x with Benefit of IDR Waivers

 

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Full-Year 2015 Adjusted EBITDA of $4.09 Billion, Up 26% vs. 2014 on $1.38 Billion in Fee-based Revenue Growth

 

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Full-Year 2015 DCF of $2.82 Billion, Coverage Ratio of .97x or 1.14x with Benefit of IDR Waivers

 

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2015 GAAP Results Include $2.6 Billion of Non-cash Impairment Charges

TULSA, Okla. – Williams Partners L.P. (NYSE: WPZ) today reported fourth quarter 2015 adjusted EBITDA of $1.06 billion, a $215 million, or 25 percent, increase from fourth quarter 2014. The increase was driven by $139 million in fee-based revenue growth, $43 million in higher olefins margins from higher volumes and $42 million in higher marketing margins. Proportional adjusted EBITDA from equity investments increased $37 million. These increases were partially offset by $45 million lower NGL margins.

 

Summary Financial Information		4Q								Full Year
Amounts in millions, except coverage ratio amounts. All income amounts attributable to Williams Partners L.P.		2015				2014				2015				2014
(Unaudited)
Williams Partners
Adjusted EBITDA (1)		$	1,064			$	849			$	4,089			$	3,241
DCF attributable to partnership operations (1)		$	718			$	266			$	2,819			$	1,719
Cash distribution coverage ratio (1)(2)			.99x				NA				.97x				NA
Net income (loss) (3)		($	1,605	)		$	382			($	1,410	)		$	1,188

 

(1)

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

(2)

Cash distribution coverage ratio for the fourth quarter and year-to-date periods has been adjusted to exclude the benefits of IDR waivers of $209 million and $418 million, respectively, associated with the WPZ merger termination fee. Including the benefit of these IDR waivers the cash distribution coverage ratios for the fourth quarter and year-to-date periods are 1.39x and 1.14x, respectively. Cash distribution coverage ratio for full-year and fourth quarter 2014 is not applicable as the cash distribution paid for fourth quarter 2014 was paid to unitholders of the merged MLP. Reconciliations to the most relevant measures included in GAAP are attached to this news release.

(3)	Amounts reported for the fourth quarter and year-to-date 2015 periods reflect impairment charges totaling $2.1 billion and $2.6 billion, respectively, associated with certain equity-method investments, goodwill and certain other assets.

 

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For the year, the partnership reported 2015 adjusted EBITDA of $4.09 billion, an $848 million, or 26 percent, increase from 2014. The increase in 2015 adjusted EBITDA was driven by $1.376 billion, or 36 percent, higher fee-based revenues and minimum volume commitments (MVCs) compared with 2014. These higher fee-based revenues and MVCs include an $837 million increase at Access Midstream primarily driven by contributions from the full-year consolidation of Access Midstream for periods following July 1, 2014. The remaining growth was driven by fee-based revenues from Gulfstar One, Transco expansion projects placed in service and higher volumes in the Northeast.

The Geismar olefins plant operated at expected production levels in the second half of 2015 and contributed approximately $168 million of olefins margins for the year. However, 2014 included approximately $311 million in assumed business interruption insurance proceeds related to the 2013 incident at the Geismar plant.

Additionally, the proportional EBITDA from non-consolidated equity investments increased $301 million in 2015 versus 2014, due primarily to full-year contributions from Access Midstream joint ventures and Discovery’s Keathley Canyon Connector project in the Atlantic-Gulf operating area.

Partially offsetting these increases in 2015 adjusted EBITDA were $229 million in lower NGL margins due primarily to NGL prices that remain at a 13-year low. NGL margins for 2015 totaled $160 million. Operating expenses increased $370 million in 2015 due to a $219 million increase at Access Midstream due to the consolidation of Access Midstream for periods following July 1, 2014 and due to expansions at the partnership’s other operating areas. General and administrative expenses decreased $11 million excluding a $78 million increase at Access Midstream due to the consolidation for periods following July 1, 2014.

Williams Partners reported unaudited fourth quarter 2015 net loss attributable to controlling interests of $1.605 billion compared with net income of $382 million in fourth quarter 2014. The unfavorable change was driven primarily by a $1.1 billion non-cash impairment of goodwill and $859 million of non-cash impairments associated with certain equity-method investments.

The impairments were largely the result of significant declines in energy commodity prices as well as market values of Williams Partners’ and comparable midstream companies’ publicly traded equity securities in the fourth quarter. The impaired equity-method investments and certain of the impaired goodwill relate to the acquisition of Access Midstream Partners completed in 2014. The remaining impaired goodwill was associated with 2012 acquisitions.

For the year, Williams Partners reported unaudited net loss attributable to controlling interests of $1.410 billion, compared with net income of $1.188 billion for 2014. The unfavorable change was driven by a $1.1 billion non-cash impairment of goodwill and $1.3 billion of impairments associated with certain equity-method investments, as well as declines in NGL margins and higher operating, depreciation and interest expenses. Higher fee-based revenues and increased olefins margins partially offset these unfavorable changes.

Distributable Cash Flow

Williams Partners reported $718 million in fourth quarter 2015 distributable cash flow (DCF) attributable to partnership operations, compared with $266 million in fourth quarter 2014. For the year, the partnership reported $2.819 billion in DCF, compared with $1.719 billion for 2014. The primary drivers

 

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of the growth in DCF for both the quarter and the year were the Access Midstream acquisition and other increases in adjusted EBITDA discussed above, partially offset by higher interest expense. DCF for 2014 reflects Williams Partners’ results prior to the merger with Access Midstream Partners, L.P.

CEO Perspective

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

“Williams Partners recorded another strong quarter, demonstrating excellent operational performance and the resilience of our business to grow despite sharply lower commodity prices. Even with reduced activities in supply areas, the partnership enjoyed continued growth in fee-based revenues primarily from demand-driven projects and expansions brought into service.

“Several Transco expansions, Gulfstar One, as well as the Keathley Canyon Connector and the expanded Geismar plant, delivered significant revenues in the second half of 2015. We expect new cash flow contributions in the first quarter of 2016 from our Leidy Southeast Expansion, the Kodiak tieback and the expansion of our offgas processing and fractionation business in Canada.

“Low natural gas prices continue to spur demand-based growth on Transco and our other interstate pipelines. As a result, our 2016 growth investments are primarily focused on serving the long-term natural gas needs of local distribution companies, electric power generation, LNG and industrial loads.”

Business Segment Performance

 

Williams Partners		Adjusted EBITDA
Amounts in millions		4Q 2015				4Q 2014				Full-Year 2015				Full-Year 2014
Access Midstream (1)		$	351			$	325			$	1,361			$	647
Atlantic-Gulf			390				268				1,528				1,075
NGL & Petchem Services (2)			72				(13	)			197				413
Northeast G&P			77				78				356				276
West			175				190				648				831
Other			(1	)			1				(1	)			(1	)
Total		$	1,064			$	849			$	4,089			$	3,241

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

 

(1)	The first half of 2014 reflects pre-merger Williams Partners and excludes Access Midstream.

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

Access Midstream Segment

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

 

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Access Midstream reported fourth quarter 2015 adjusted EBITDA of $351 million, compared with $325 million in fourth quarter 2014. The increase was driven by higher fee-based volumes, minimum volume commitments and the increased ownership interest in the Utica East Ohio Midstream joint venture.

For the year, Access Midstream reported adjusted EBITDA of $1.36 billion, compared with $647 million previously reported for full-year 2014. Williams Partners’ results for first and second quarter 2014 are on a pre-merger basis and exclude Access Midstream.

Atlantic-Gulf Segment

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

Atlantic-Gulf reported fourth quarter 2015 adjusted EBITDA of $390 million, compared with $268 million for fourth quarter 2014. The increase was due primarily to $88 million in higher fee-based revenues from both Gulfstar One and Transco expansion projects, as well as $35 million higher proportional adjusted EBITDA primarily from Discovery driven by the Keathley Canyon Connector project.

For the year, Atlantic-Gulf reported adjusted EBITDA of $1.528 billion, compared with $1.075 billion for full-year 2014. The increase was due primarily to $385 million in higher fee-based revenues from both Gulfstar One and Transco expansion projects, as well as $106 million higher proportional adjusted EBITDA primarily from Discovery driven by the Keathley Canyon Connector project, partially offset by lower NGL margins.

NGL & Petchem Services Segment

NGL & Petchem Services includes an 88.5 percent interest in an olefins production facility in Geismar, La., along with a refinery grade propylene splitter and pipelines in the Gulf Coast region. This segment also includes midstream operations in Alberta, Canada, including an oil sands offgas processing plant near Fort McMurray, 261 miles of NGL and olefins pipelines and an NGL/olefins fractionation facility at Redwater. This segment also includes the partnership’s energy commodities marketing business, an NGL fractionator and storage facilities near Conway, Kan. and a 50-percent interest in Overland Pass Pipeline.

NGL & Petchem Services reported fourth quarter 2015 adjusted EBITDA of $72 million, compared with a loss of $13 million for fourth quarter 2014. Geismar operated at expected production levels and contributed approximately $53 million of olefins margins for fourth quarter 2015. Marketing margins increased $41 million for the quarter due primarily to the absence of unfavorable inventory valuation adjustments, which occurred in fourth quarter 2014. Partially offsetting these increases were $27 million in lower commodity-related margins at the Canadian operations.

 

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For the year, NGL & Petchem Services reported adjusted EBITDA of $197 million, compared with $413 million for 2014. The Geismar olefins plant operated at expected production levels in the second half of 2015 and contributed approximately $168 million of olefins margins for the year. However, 2014 included approximately $311 million in assumed business interruption insurance proceeds related to the 2013 incident at the Geismar plant. In addition to the absence of the assumed business interruption insurance proceeds, the year-over-year results were also partially offset by $89 million in lower commodity-related margins at the Canadian operations.

Northeast G&P Segment

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

Northeast G&P reported fourth quarter 2015 adjusted EBITDA of $77 million, compared with $78 million for fourth quarter 2014. The lack of growth between fourth quarter 2015 and fourth quarter 2014 was primarily due to lower fee-based volumes caused by price-related shut-ins by producers.

For the year, Northeast G&P reported adjusted EBITDA of $356 million, compared with $276 million for full-year 2014. The improved results were due primarily to a $96 million increase in fee-based revenues driven primarily by higher volumes and incremental new service at Ohio Valley Midstream as well as $23 million higher proportional EBITDA from equity method investments. These gains were partially offset by $49 million in higher operating expenses associated with growth and operational repairs in the Northeast.

Williams Partners recently negotiated a new gathering agreement with an existing customer. The new agreement provides for a lower per-unit rate but with expected higher revenue as a result of additional expected production as well as additional acreage dedication and extended term. Williams Partners expects no change in revenue associated with this new agreement in 2016 and higher revenue in 2017 and beyond.

West Segment

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

West reported fourth quarter adjusted EBITDA of $175 million, compared with $190 million for fourth quarter 2014. Lower adjusted EBITDA for the quarter was due primarily to $27 million lower NGL margins from lower NGL prices that remain at 13-year lows.

For the year, West reported adjusted EBITDA of $648 million, compared with $831 million for full-year 2014. Lower adjusted EBITDA for the year-over-year period was due primarily to $150 million lower NGL margins and $24 million higher expenses primarily driven by the addition of the Niobrara operations from the Access Midstream merger. Higher fee-based revenues from the addition of the Niobrara operations were largely offset by decreases in other areas.

 

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Year-End 2015 Materials to Be Posted Shortly; Conference Call Scheduled for Tomorrow

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

Williams Partners and Williams will jointly host a conference call and live webcast on Thursday, Feb. 18, at 9:30 a.m. EST. A limited number of phone lines will be available at (800) 524-8850. International callers should dial (416) 204-9702. A link to the webcast, as well as replays of the webcast in both streaming and downloadable podcast formats, will be available for two weeks following the event at www.williams.com.

Form 10-K

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

Definitions of Non-GAAP Measures

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

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

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

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

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

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

 

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

About Williams Partners

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

Forward-Looking Statements

The reports, filings, and other public announcements of Williams Partners L.P. (WPZ) may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “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. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical facts, included in this document 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:

 

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

 

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

 

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

 

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Our and our affiliates’ future credit ratings;

 

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Amounts and nature of future capital expenditures;

 

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Expansion and growth of our business and operations;

 

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Financial condition and liquidity;

 

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Business strategy;

 

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Cash flow from operations or results of operations;

 

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Seasonality of certain business components;

 

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

 

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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 document. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:

 

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

 

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

 

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

 

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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;

 

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Availability of supplies, market demand and volatility of prices;

 

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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);

 

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

 

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

 

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

 

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Development of alternative energy sources;

 

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The impact of operational and developmental hazards and unforeseen interruptions;

 

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

 

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

 

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

 

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Changes in maintenance and construction costs;

 

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Changes in the current geopolitical situation;

 

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

 

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

 

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

 

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

 

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

 

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Additional risks described in our filings with the Securities and Exchange Commission (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 to announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.

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

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 referred to below in addition to the other information in this document. If any of the risks to which we are subject 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 25, 2015 and in Part II, Item 1A. Risk Factors in our Quarterly Reports on Form 10-Q available from our office or from our website at www.williams.com.

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Williams Partners L.P.

Reconciliation of Non-GAAP Measures

(UNAUDITED)

 

		2014																				2015
(Dollars in millions, except coverage ratios)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Williams Partners L.P.
Reconciliation of GAAP “Net Income (Loss)” to Non-GAAP “Modified EBITDA”, “Adjusted EBITDA”, and “Distributable cash flow”
Net income (loss)		$	352			$	223			$	247			$	462			$	1,284			$	112			$	332			$	(167	)		$	(1,596	)		$	(1,319	)
Provision (benefit) for income taxes			8				5				10				6				29				3				—				1				(3	)			1
Interest expense			106				126				154				176				562				192				203				205				211				811
Equity (earnings) losses			(23	)			(32	)			(85	)			(88	)			(228	)			(51	)			(93	)			(92	)			(99	)			(335	)
Impairment of equity-method investments			—				—				—				—				—				—				—				461				859				1,320
Other investing (income) loss			—				(1	)			—				(1	)			(2	)			(1	)			—				—				(1	)			(2	)
Proportional Modified EBITDA of equity-method investments			54				62				150				165				431				136				183				185				195				699
Impairment of goodwill			—				—				—				—				—				—				—				—				1,098				1,098
Depreciation and amortization expenses			208				207				364				372				1,151				419				419				423				441				1,702
Accretion for asset retirement obligations associated with nonregulated operations			3				6				3				5				17				7				9				5				7				28
Modified EBITDA			708				596				843				1,097				3,244				817				1,053				1,021				1,112				4,003
Adjustments
Estimated minimum volume commitments			—				—				47				(114	)			(67	)			55				55				65				(175	)			—
Acquisition-related expenses			—				2				13				1				16				—				—				—				—				—
Merger and transition related expenses			—				—				11				30				41				32				14				2				2				50
Share of impairment at equity-method investments			—				—				—				—				—				8				1				17				7				33
Geismar Incident adjustment for insurance and timing			54				96				—				(71	)			79				—				(126	)			—				—				(126	)
Loss related to Geismar Incident			—				—				5				5				10				1				1				—				—				2
Impairment of certain assets			—				17				—				35				52				3				24				2				116				145
Contingency loss (gain), net of legal costs			—				—				—				(143	)			(143	)			—				—				—				—				—
Net gain related to partial acreage dedication release			—				—				(12	)			—				(12	)			—				—				—				—				—
Loss related to compressor station fire			6				—				—				—				6				—				—				—				—				—
Loss (recovery) related to Opal incident			—				6				—				2				8				1				—				(8	)			1				(6	)
Loss on sale of equipment			—				—				—				7				7				—				—				—				—				—
Gain on extinguishment of debt			—				—				—				—				—				—				(14	)			—				—				(14	)
Expenses associated with strategic alternatives			—				—				—				—				—				—				—				1				1				2
Total EBITDA adjustments			60				121				64				(248	)			(3	)			100				(45	)			79				(48	)			86
Adjusted EBITDA		$	768			$	717			$	907			$	849			$	3,241				917				1,008				1,100				1,064				4,089
Maintenance capital expenditures (1)																							(54	)			(80	)			(114	)			(114	)			(362	)
Interest expense (cash portion) (2)																							(204	)			(207	)			(219	)			(214	)			(844	)
Cash taxes																							(1	)			—				—				—				(1	)
Income attributable to noncontrolling interests (3)																							(23	)			(32	)			(27	)			(29	)			(111	)
WPZ restricted stock unit non-cash compensation																							7				6				7				7				27
Plymouth incident adjustment																							4				6				7				4				21
Distributable cash flow attributable to Partnership Operations																							646				701				754				718				2,819
Total cash distributed (4)																						$	725			$	723			$	723			$	725			$	2,896
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash distributed																							0.89				0.97				1.04				0.99				0.97
Net income divided by Total cash distributed																							0.15				0.46				(0.23	)			(2.20	)			(0.46	)

 

Notes:		(1)		Includes proportionate share of maintenance capital expenditures of equity investments.
		(2)		Includes proportionate share of interest expense of equity investments.
		(3)		Income attributable to noncontrolling interests for the fourth quarter 2015 excludes allocable share of impairment of goodwill.
		(4)		Cash distributions for the third quarter, fourth quarter, and year-to-date periods have been increased by $209 million, $209 million, and $418 million, respectively, in order to exclude the impact of the IDR waiver associated with the WPZ merger termination fee from the determination of coverage ratios.

 

9

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Williams Partners L.P.

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

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Modified EBITDA:
Access Midstream		$	—			$	(2	)		$	254			$	390			$	642			$	228			$	273			$	268			$	510			$	1,279
Northeast G&P			48				59				80				208				395				90				70				84				70				314
Atlantic-Gulf			266				270				271				258				1,065				335				389				414				385				1,523
West			212				199				224				188				823				161				150				169				77				557
NGL & Petchem Services			182				72				17				53				324				6				158				85				72				321
Other			—				(2	)			(3	)			—				(5	)			(3	)			13				1				(2	)			9
Total Modified EBITDA		$	708			$	596			$	843			$	1,097			$	3,244			$	817			$	1,053			$	1,021			$	1,112			$	4,003
Adjustments:
Access Midstream
ACMP Acquisition-related expenses		$	—			$	2			$	13			$	1			$	16			$	—			$	—			$	—			$	—			$	—
ACMP Merger and transition costs			—				—				8				29				37				30				14				2				2				48
Loss on sale of equipment			—				—				—				7				7				—				—				—				—				—
Impairment of certain assets			—				—				—				12				12				1				3				—				10				14
Estimated minimum volume commitments			—				—				47				(114	)			(67	)			55				55				65				(175	)			—
Share of impairment at equity-method investments			—				—				—				—				—				—				—				16				4				20
Total Access Midstream adjustments			—				2				68				(65	)			5				86				72				83				(159	)			82
Northeast G&P
Share of impairment at equity-method investment			—				—				—				—				—				8				1				1				3				13
Contingency gain, net of legal costs			—				—				—				(143	)			(143	)			—				—				—				—				—
Loss related to compressor station fire			6				—				—				—				6				—				—				—				—				—
Net gain related to partial acreage dedication release			—				—				(12	)			—				(12	)			—				—				—				—				—
Impairment of certain assets			—				17				—				13				30				2				21				2				4				29
Total Northeast G&P adjustments			6				17				(12	)			(130	)			(119	)			10				22				3				7				42
Atlantic-Gulf
Impairment of certain assets			—				—				—				10				10				—				—				—				5				5
Total Atlantic-Gulf adjustments			—				—				—				10				10				—				—				—				5				5
West
Impairment of certain assets			—				—				—				—				—				—				—				—				97				97
Loss (recovery) related to Opal incident			—				6				—				2				8				1				—				(8	)			1				(6	)
Total West adjustments			—				6				—				2				8				1				—				(8	)			98				91
NGL & Petchem Services
Loss related to Geismar Incident			—				—				5				5				10				1				1				—				—				2
Geismar Incident adjustment for insurance and timing			54				96				—				(71	)			79				—				(126	)			—				—				(126	)
Total NGL & Petchem Services adjustments			54				96				5				(66	)			89				1				(125	)			—				—				(124	)
Other
ACMP Merger-related expenses			—				—				3				1				4				2				—				—				—				2
Expenses associated with strategic alternatives			—				—				—				—				—				—				—				1				1				2
Gain on extinguishment of debt			—				—				—				—				—				—				(14	)			—				—				(14	)
Total Other adjustments			—				—				3				1				4				2				(14	)			1				1				(10	)
Total Adjustments		$	60			$	121			$	64			$	(248	)		$	(3	)		$	100			$	(45	)		$	79			$	(48	)		$	86
Adjusted EBITDA:
Access Midstream		$	—			$	—			$	322			$	325			$	647			$	314			$	345			$	351			$	351			$	1,361
Northeast G&P			54				76				68				78				276				100				92				87				77				356
Atlantic-Gulf			266				270				271				268				1,075				335				389				414				390				1,528
West			212				205				224				190				831				162				150				161				175				648
NGL & Petchem Services			236				168				22				(13	)			413				7				33				85				72				197
Other			—				(2	)			—				1				(1	)			(1	)			(1	)			2				(1	)			(1	)
Total Adjusted EBITDA		$	768			$	717			$	907			$	849			$	3,241			$	917			$	1,008			$	1,100			$	1,064			$	4,089

 

10

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Financial Highlights and Operating Statistics

(UNAUDITED)

Final

December 31, 2015

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Williams Partners L.P.

Reconciliation of Non-GAAP Measures

(UNAUDITED)

 

		2014																				2015
(Dollars in millions, except coverage ratios)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Williams Partners L.P.
Reconciliation of GAAP “Net Income (Loss)” to Non-GAAP “Modified EBITDA”, “Adjusted EBITDA”, and “Distributable cash flow”
Net income (loss)		$	352			$	223			$	247			$	462			$	1,284			$	112			$	332			$	(167	)		$	(1,596	)		$	(1,319	)
Provision (benefit) for income taxes			8				5				10				6				29				3				—				1				(3	)			1
Interest expense			106				126				154				176				562				192				203				205				211				811
Equity (earnings) losses			(23	)			(32	)			(85	)			(88	)			(228	)			(51	)			(93	)			(92	)			(99	)			(335	)
Impairment of equity-method investments			—				—				—				—				—				—				—				461				859				1,320
Other investing (income) loss			—				(1	)			—				(1	)			(2	)			(1	)			—				—				(1	)			(2	)
Proportional Modified EBITDA of equity-method investments			54				62				150				165				431				136				183				185				195				699
Impairment of goodwill			—				—				—				—				—				—				—				—				1,098				1,098
Depreciation and amortization expenses			208				207				364				372				1,151				419				419				423				441				1,702
Accretion for asset retirement obligations associated with nonregulated operations			3				6				3				5				17				7				9				5				7				28
Modified EBITDA			708				596				843				1,097				3,244				817				1,053				1,021				1,112				4,003
Adjustments
Estimated minimum volume commitments			—				—				47				(114	)			(67	)			55				55				65				(175	)			—
Acquisition-related expenses			—				2				13				1				16				—				—				—				—				—
Merger and transition related expenses			—				—				11				30				41				32				14				2				2				50
Share of impairment at equity-method investments			—				—				—				—				—				8				1				17				7				33
Geismar Incident adjustment for insurance and timing			54				96				—				(71	)			79				—				(126	)			—				—				(126	)
Loss related to Geismar Incident			—				—				5				5				10				1				1				—				—				2
Impairment of certain assets			—				17				—				35				52				3				24				2				116				145
Contingency loss (gain), net of legal costs			—				—				—				(143	)			(143	)			—				—				—				—				—
Net gain related to partial acreage dedication release			—				—				(12	)			—				(12	)			—				—				—				—				—
Loss related to compressor station fire			6				—				—				—				6				—				—				—				—				—
Loss (recovery) related to Opal incident			—				6				—				2				8				1				—				(8	)			1				(6	)
Loss on sale of equipment			—				—				—				7				7				—				—				—				—				—
Gain on extinguishment of debt			—				—				—				—				—				—				(14	)			—				—				(14	)
Expenses associated with strategic alternatives			—				—				—				—				—				—				—				1				1				2
Total EBITDA adjustments			60				121				64				(248	)			(3	)			100				(45	)			79				(48	)			86
Adjusted EBITDA		$	768			$	717			$	907			$	849			$	3,241				917				1,008				1,100				1,064				4,089
Maintenance capital expenditures (1)																							(54	)			(80	)			(114	)			(114	)			(362	)
Interest expense (cash portion) (2)																							(204	)			(207	)			(219	)			(214	)			(844	)
Cash taxes																							(1	)			—				—				—				(1	)
Income attributable to noncontrolling interests (3)																							(23	)			(32	)			(27	)			(29	)			(111	)
WPZ restricted stock unit non-cash compensation																							7				6				7				7				27
Plymouth incident adjustment																							4				6				7				4				21
Distributable cash flow attributable to Partnership Operations																							646				701				754				718				2,819
Total cash distributed (4)																						$	725			$	723			$	723			$	725			$	2,896
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash distributed																							0.89				0.97				1.04				0.99				0.97
Net income divided by Total cash distributed																							0.15				0.46				(0.23	)			(2.20	)			(0.46	)

 

Notes:		(1)		Includes proportionate share of maintenance capital expenditures of equity investments.
		(2)		Includes proportionate share of interest expense of equity investments.
		(3)		Income attributable to noncontrolling interests for the fourth quarter 2015 excludes allocable share of impairment of goodwill.
		(4)		Cash distributions for the third quarter, fourth quarter, and year-to-date periods have been increased by $209 million, $209 million, and $418 million, respectively, in order to exclude the impact of the IDR waiver associated with the WPZ merger termination fee from the determination of coverage ratios.

---

Williams Partners L.P.

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

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Modified EBITDA:
Access Midstream		$	—			$	(2	)		$	254			$	390			$	642			$	228			$	273			$	268			$	510			$	1,279
Northeast G&P			48				59				80				208				395				90				70				84				70				314
Atlantic-Gulf			266				270				271				258				1,065				335				389				414				385				1,523
West			212				199				224				188				823				161				150				169				77				557
NGL & Petchem Services			182				72				17				53				324				6				158				85				72				321
Other			—				(2	)			(3	)			—				(5	)			(3	)			13				1				(2	)			9
Total Modified EBITDA		$	708			$	596			$	843			$	1,097			$	3,244			$	817			$	1,053			$	1,021			$	1,112			$	4,003
Adjustments:
Access Midstream
ACMP Acquisition-related expenses		$	—			$	2			$	13			$	1			$	16			$	—			$	—			$	—			$	—			$	—
ACMP Merger and transition costs			—				—				8				29				37				30				14				2				2				48
Loss on sale of equipment			—				—				—				7				7				—				—				—				—				—
Impairment of certain assets			—				—				—				12				12				1				3				—				10				14
Estimated minimum volume commitments			—				—				47				(114	)			(67	)			55				55				65				(175	)			—
Share of impairment at equity-method investments			—				—				—				—				—				—				—				16				4				20
Total Access Midstream adjustments			—				2				68				(65	)			5				86				72				83				(159	)			82
Northeast G&P
Share of impairment at equity-method investment			—				—				—				—				—				8				1				1				3				13
Contingency gain, net of legal costs			—				—				—				(143	)			(143	)			—				—				—				—				—
Loss related to compressor station fire			6				—				—				—				6				—				—				—				—				—
Net gain related to partial acreage dedication release			—				—				(12	)			—				(12	)			—				—				—				—				—
Impairment of certain assets			—				17				—				13				30				2				21				2				4				29
Total Northeast G&P adjustments			6				17				(12	)			(130	)			(119	)			10				22				3				7				42
Atlantic-Gulf
Impairment of certain assets			—				—				—				10				10				—				—				—				5				5
Total Atlantic-Gulf adjustments			—				—				—				10				10				—				—				—				5				5
West
Impairment of certain assets			—				—				—				—				—				—				—				—				97				97
Loss (recovery) related to Opal incident			—				6				—				2				8				1				—				(8	)			1				(6	)
Total West adjustments			—				6				—				2				8				1				—				(8	)			98				91
NGL & Petchem Services
Loss related to Geismar Incident			—				—				5				5				10				1				1				—				—				2
Geismar Incident adjustment for insurance and timing			54				96				—				(71	)			79				—				(126	)			—				—				(126	)
Total NGL & Petchem Services adjustments			54				96				5				(66	)			89				1				(125	)			—				—				(124	)
Other
ACMP Merger-related expenses			—				—				3				1				4				2				—				—				—				2
Expenses associated with strategic alternatives			—				—				—				—				—				—				—				1				1				2
Gain on extinguishment of debt			—				—				—				—				—				—				(14	)			—				—				(14	)
Total Other adjustments			—				—				3				1				4				2				(14	)			1				1				(10	)
Total Adjustments		$	60			$	121			$	64			$	(248	)		$	(3	)		$	100			$	(45	)		$	79			$	(48	)		$	86
Adjusted EBITDA:
Access Midstream		$	—			$	—			$	322			$	325			$	647			$	314			$	345			$	351			$	351			$	1,361
Northeast G&P			54				76				68				78				276				100				92				87				77				356
Atlantic-Gulf			266				270				271				268				1,075				335				389				414				390				1,528
West			212				205				224				190				831				162				150				161				175				648
NGL & Petchem Services			236				168				22				(13	)			413				7				33				85				72				197
Other			—				(2	)			—				1				(1	)			(1	)			(1	)			2				(1	)			(1	)
Total Adjusted EBITDA		$	768			$	717			$	907			$	849			$	3,241			$	917			$	1,008			$	1,100			$	1,064			$	4,089

---

Williams Partners L.P.

Consolidated Statement of Income (Loss)

(UNAUDITED)

 

		2014																				2015
(Dollars in millions, except per-unit amounts)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Revenues:
Service revenues		$	763			$	763			$	1,066			$	1,296			$	3,888			$	1,192			$	1,231			$	1,232			$	1,480			$	5,135
Product sales			930				853				942				796				3,521				519				599				560				518				2,196
Total revenues			1,693				1,616				2,008				2,092				7,409				1,711				1,830				1,792				1,998				7,331
Costs and expenses:
Product costs			769				724				807				716				3,016				463				494				426				384				1,767
Operating and maintenance expenses			248				251				354				424				1,277				380				431				394				432				1,637
Depreciation and amortization expenses			208				207				364				372				1,151				419				419				423				441				1,702
Selling, general, and administrative expenses			130				134				168				201				633				193				164				156				171				684
Impairment of goodwill			—				—				—				—				—				—				—				—				1,098				1,098
Net insurance recoveries—Geismar Incident			(119	)			(42	)			—				(71	)			(232	)			—				(126	)			—				—				(126	)
Other (income) expense—net			17				27				3				(92	)			(45	)			17				38				7				124				186
Total costs and expenses			1,253				1,301				1,696				1,550				5,800				1,472				1,420				1,406				2,650				6,948
Operating income (loss)			440				315				312				542				1,609				239				410				386				(652	)			383
Equity earnings (losses)			23				32				85				88				228				51				93				92				99				335
Impairment of equity-method investments			—				—				—				—				—				—				—				(461	)			(859	)			(1,320	)
Other investing income (loss)—net			—				1				—				1				2				1				—				—				1				2
Interest incurred			(131	)			(151	)			(200	)			(201	)			(683	)			(209	)			(215	)			(216	)			(224	)			(864	)
Interest capitalized			25				25				46				25				121				17				12				11				13				53
Other income (expense)—net			3				6				14				13				36				16				32				22				23				93
Income (loss) before income taxes			360				228				257				468				1,313				115				332				(166	)			(1,599	)			(1,318	)
Provision (benefit) for income taxes			8				5				10				6				29				3				—				1				(3	)			1
Net income (loss)			352				223				247				462				1,284				112				332				(167	)			(1,596	)			(1,319	)
Less: Net income attributable to noncontrolling interests			—				2				14				80				96				23				32				27				9				91
Net income (loss) attributable to controlling interests		$	352			$	221			$	233			$	382			$	1,188			$	89			$	300			$	(194	)		$	(1,605	)		$	(1,410	)
Allocation of net income (loss) for calculation of earnings per common unit:
Net income (loss) attributable to controlling interests		$	352			$	221			$	233			$	382			$	1,188			$	89			$	300			$	(194	)		$	(1,605	)		$	(1,410	)
Allocation of net income (loss) to general partner			180				156				187				233				756				195				216				1				(27	)			385
Allocation of net income (loss) to Class B units (1)			—				—				—				—				—				(2	)			1				(5	)			(38	)			(45	)
Allocation of net income (loss) to Class D units			14				18				17				24				73				68				—				—				—				68
Allocation of net income (loss) to common units (1)		$	158			$	47			$	29			$	125			$	359			$	(172	)		$	83			$	(190	)		$	(1,540	)		$	(1,818	)
Diluted earnings (loss) per common unit:
Net income (loss) per common unit (1)		$	.44			$	.13			$	.08			$	.35			$	.99			$	(.34	)		$	.14			$	(0.32	)		$	(2.62	)		$	(3.20	)
Weighted average number of common units outstanding (thousands)			361,620				361,620				362,064				362,556				361,968				507,001			$	587,088			$	586,722			$	587,581			$	567,275
Cash distributions per common unit		$	.9045			$	.9165			$	.9285			$	.8500			$	3.5995			$	.8500			$	.8500			$	.8500			$	.8500			$	3.4000

 

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

---

Williams Partners L.P.

Access Midstream

(UNAUDITED)

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Revenues:
Service revenues:
Nonregulated gathering & processing fee-based revenue		$	—			$	—			$	292			$	473			$	765			$	296			$	311			$	306			$	553			$	1,466
Other fee revenues			—				—				—				—				—				6				28				17				18				69
			—				—				292				473				765				302				339				323				571				1,535
Intrasegment eliminations			—				—				—				—				—				(3	)			(3	)			(3	)			(3	)			(12	)
Total revenues			—				—				292				473				765				299				336				320				568				1,523
Segment costs and expenses:
Other segment costs and expenses (1)			—				2				122				177				301				154				158				129				153				594
Intrasegment eliminations			—				—				—				—				—				(3	)			(3	)			(3	)			(3	)			(12	)
Total segment costs and expenses			—				2				122				177				301				151				155				126				150				582
Proportional Modified EBITDA of equity-method investments			—				—				84				94				178				80				92				74				92				338
Modified EBITDA			—				(2	)			254				390				642				228				273				268				510				1,279
Adjustments			—				2				68				(65	)			5				86				72				83				(159	)			82
Adjusted EBITDA		$	—			$	—			$	322			$	325			$	647			$	314			$	345			$	351			$	351			$	1,361
Distributions received		$	31			$	33			$	78			$	83			$	225			$	—			$	—			$	—			$	—			$	—
Operating statistics
Throughput, bcf per day (2)
Barnett shale											.876				.853				.865				.812				.804				.788				.743				.786
Eagle Ford shale											.348				.376				.362				.388				.377				.418				.406				.397
Haynesville shale											.714				.802				.758				.971				1.085				1.000				.914				.992
Marcellus shale											1.193				1.272				1.233				1.232				1.274				1.239				1.229				1.243
Utica shale											.633				.733				.683				.778				.919				.696				.970				.841
Mid-Continent											.554				.537				.545				.505				.536				.519				.469				.507
Total throughput											4.318				4.573				4.446				4.686				4.995				4.660				4.731				4.766

 

(1)	Includes operating expenses, general and administrative expenses, and other income or expenses, such as certain noncash impairments and other items.

 

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

---

Williams Partners L.P.

Northeast G&P

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Revenues:
Service revenues:
Nonregulated gathering and processing fee-based revenue		$	93			$	95			$	103			$	117			$	408			$	131			$	119			$	120			$	114			$	484
Other fee revenues			6				12				11				15				44				11				21				19				13				64
Product sales:
NGL sales from gas processing			2				2				2				3				9				2				3				3				3				11
Marketing sales			58				35				66				62				221				36				32				24				24				116
Other sales			—				—				—				—				—				—				—				—				—				—
			159				144				182				197				682				180				175				166				154				675
Intrasegment eliminations			—				—				—				(1	)			(1	)			—				—				—				—				—
Total revenues			159				144				182				196				681				180				175				166				154				675
Segment costs and expenses:
NGL cost of goods sold			1				—				—				(1	)			—				1				1				—				2				4
Marketing cost of goods sold			57				37				65				62				221				36				32				25				24				117
Other segment costs and expenses (1)			62				67				48				(59	)			118				60				87				78				77				302
Intrasegment eliminations			—				—				—				(1	)			(1	)			—				—				—				—				—
Total segment costs and expenses			120				104				113				1				338				97				120				103				103				423
Proportional Modified EBITDA of equity-method investments			9				19				11				13				52				7				15				21				19				62
Modified EBITDA			48				59				80				208				395				90				70				84				70				314
Adjustments			6				17				(12	)			(130	)			(119	)			10				22				3				7				42
Adjusted EBITDA		$	54			$	76			$	68			$	78			$	276			$	100			$	92			$	87			$	77			$	356
Operating statistics
Gathering and Processing (2)
Gathering volumes (Tbtu)			179				189				193				227				788				236				206				210				211				863
Plant inlet natural gas volumes (Tbtu)			29				27				30				32				118				34				42				43				31				150
Ethane equity sales (million gallons)			—				—				—				3				3				4				11				16				23				54
Non-ethane equity sales (million gallons)			2				1				3				2				8				2				3				4				4				13
NGL equity sales (million gallons)			2				1				3				5				11				6				14				20				27				67
Ethane production (million gallons)			1				1				1				30				33				4				43				52				50				149
Non-ethane production (million gallons)			38				37				42				40				157				45				56				61				41				203
NGL production (million gallons)			39				38				43				70				190				49				99				113				91				352
Laurel Mountain Midstream LLC (equity investment)—100%
Gathering volumes (Tbtu)			34				36				38				40				148				40				40				51				53				184

 

(1)	Includes operating expenses, general and administrative expenses, and other income or expenses, such as certain noncash impairments and other items.

 

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

---

Williams Partners L.P.

Atlantic-Gulf

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Revenues:
Service revenues:
Nonregulated gathering & processing fee-based revenue		$	35			$	41			$	40			$	58			$	174			$	95			$	106			$	102			$	94			$	397
Regulated transportation revenue			288				274				277				291				1,130				308				312				328				337				1,285
Other fee revenues			30				28				28				26				112				29				29				29				32				119
Product sales:
NGL sales from gas processing			20				25				19				14				78				11				7				11				10				39
Marketing sales			171				162				171				139				643				87				80				63				64				294
Other sales			1				1				2				(1	)			3				—				1				—				—				1
Tracked revenues			53				40				52				62				207				49				56				63				42				210
			598				571				589				589				2,347				579				591				596				579				2,345
Intrasegment eliminations			2				2				1				2				7				—				—				(1	)			—				(1	)
Total revenues			600				573				590				591				2,354				579				591				595				579				2,344
Segment costs and expenses:
NGL cost of goods sold			6				5				5				5				21				4				2				3				3				12
Marketing cost of goods sold			171				162				171				140				644				87				80				63				63				293
Other segment costs and expenses (1)			137				128				133				164				562				142				131				131				160				564
Tracked costs			53				40				52				62				207				49				56				63				42				210
Intrasegment eliminations			2				2				1				1				6				—				—				(1	)			—				(1	)
Total segment costs and expenses			369				337				362				372				1,440				282				269				259				268				1,078
Proportional Modified EBITDA of equity-method investments			35				34				43				39				151				38				67				78				74				257
Modifed EBITDA			266				270				271				258				1,065				335				389				414				385				1,523
Adjustments			—				—				—				10				10				—				—				—				5				5
Adjusted EBITDA		$	266			$	270			$	271			$	268			$	1,075			$	335			$	389			$	414			$	390			$	1,528
Operating statistics
Gathering and Processing (2)
Gathering volumes (Tbtu)			28				31				30				27				116				34				38				37				34				143
Plant inlet natural gas volumes (Tbtu)			60				72				73				73				278				72				64				72				71				279
Ethane equity sales (million gallons)			2				6				8				2				18				11				2				7				10				30
Non-ethane equity sales (million gallons)			12				18				13				13				56				15				12				17				16				60
NGL equity sales (million gallons)			14				24				21				15				74				26				14				24				26				90
Ethane margin ($/gallon)		$	.46			$	.23			$	.14			$	(.03	)		$	.18			$	.04			$	(.07	)		$	.04			$	.02			$	.03
Non-ethane margin ($/gallon)		$	1.10			$	1.04			$	1.00			$	.69			$	.96			$	.43			$	.49			$	.42			$	.42			$	.43
NGL margin ($/gallon)		$	1.02			$	.82			$	.68			$	.59			$	.77			$	.26			$	.41			$	.32			$	.26			$	.30
Ethane production (million gallons)			45				57				60				59				221				38				33				36				46				153
Non-ethane production (million gallons)			71				87				92				93				343				94				87				93				86				360
NGL production (million gallons)			116				144				152				152				564				132				120				129				132				513
Discovery Producer Services LLC (equity investment)—100%
Gathering volumes (Tbtu)			21				26				32				33				112				35				61				63				59				218
NGL equity sales (million gallons)			10				10				18				15				53				17				22				21				20				80
NGL production (million gallons)			47				54				65				61				227				62				79				81				72				294
Transcontinental Gas Pipe Line
Throughput (Tbtu)			949.2				796.8				821.3				887.3				3,454.6				1,005.1				784.9				803.6				779.3				3,372.9
Avg. daily transportation volumes (Tbtu)			10.5				8.8				8.9				9.6				9.5				11.2				8.6				8.7				8.5				9.2
Avg. daily firm reserved capacity (Tbtu)			9.6				9.4				9.5				9.9				9.6				10.5				11.0				11.5				11.8				11.2

 

(1)	Includes operating expenses, general and administrative expenses, and other income or expenses, such as certain noncash impairments and other items.

 

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

---

Williams Partners L.P.

West

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Revenues:
Service revenues:
Nonregulated gathering & processing fee-based revenue		$	132			$	141			$	144			$	143			$	560			$	138			$	138			$	138			$	147			$	561
Regulated transportation revenue			116				112				113				117				458				116				113				115				118				462
Other fee revenues			8				8				8				8				32				8				7				10				7				32
Product sales:
NGL sales from gas processing			103				95				116				88				402				48				49				43				47				187
Marketing sales			30				28				29				20				107				10				15				15				13				53
Other sales			12				9				10				6				37				6				4				4				3				17
Tracked revenues			—				1				—				—				1				—				—				—				—				—
			401				394				420				382				1,597				326				326				325				335				1,312
Intrasegment eliminations			—				(1	)			—				—				(1	)			—				—				—				—				—
Total revenues			401				393				420				382				1,596				326				326				325				335				1,312
Segment costs and expenses:
NGL cost of goods sold			38				35				41				33				147				23				20				20				19				82
Marketing cost of goods sold			30				27				29				19				105				10				15				15				13				53
Other cost of goods sold			4				6				4				4				18				3				2				3				2				10
Other segment costs and expenses (1)			117				126				122				138				503				129				139				118				224				610
Tracked costs			—				1				—				—				1				—				—				—				—				—
Intrasegment eliminations			—				(1	)			—				—				(1	)			—				—				—				—				—
Total segment costs and expenses			189				194				196				194				773				165				176				156				258				755
Proportional Modified EBITDA of equity-method investments			—				—				—				—				—				—				—				—				—				—
Modifed EBITDA			212				199				224				188				823				161				150				169				77				557
Adjustments			—				6				—				2				8				1				—				(8	)			98				91
Adjusted EBITDA		$	212			$	205			$	224			$	190			$	831			$	162			$	150			$	161			$	175			$	648
Operating statistics
Gathering and Processing
Gathering volumes (Tbtu)			229				230				245				242				946				232				231				233				229				925
Plant inlet natural gas volumes (Tbtu)			250				246				266				260				1,022				257				259				252				255				1,023
Ethane equity sales (million gallons)			4				5				7				4				20				2				4				4				2				12
Non-ethane equity sales (million gallons)			69				71				90				80				310				74				76				75				78				303
NGL equity sales (million gallons)			73				76				97				84				330				76				80				79				80				315
Ethane margin ($/gallon)			.12				.22				.21				.17				.19				.39				.14				.28				.40				.27
Non-ethane margin ($/gallon)			.94				.84				.81				.66				.81				.34				.37				.29				.35				.34
NGL margin ($/gallon)			.89				.80				.77				.64				.77				.34				.35				.29				.35				.33
Ethane production (million gallons)			60				86				64				40				250				33				40				37				30				140
Non-ethane production (million gallons)			233				232				255				245				965				239				248				255				253				995
NGL production (million gallons)			293				318				319				285				1,215				272				288				292				283				1,135
Northwest Pipeline LLC
Throughput (Tbtu)			192.4				141.3				156.7				196.6				687.0				202.7				183.0				177.9				199.2				762.8
Avg. daily transportation volumes (Tbtu)			2.1				1.6				1.7				2.1				1.9				2.3				2.0				1.9				2.2				2.1
Avg. daily firm reserved capacity (Tbtu)			3.0				3.0				3.0				3.0				3.0				3.0				3.0				3.0				3.0				3.0

 

(1)	Includes operating expenses, general and administrative expenses, and other income or expenses, such as certain noncash impairments and other items.

 

 

---

Williams Partners L.P.

NGL & Petchem Services

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Revenues:
Service revenue:
Nonregulated gathering & processing fee-based revenue		$	7			$	7			$	7			$	7			$	28			$	7			$	10			$	11			$	11			$	39
Other fee-based revenues			33				33				33				35				134				41				42				47				46				176
Product sales:
NGL sales from gas processing			54				32				31				41				158				28				18				19				20				85
Olefin sales			79				96				73				93				341				71				162				174				148				555
Marketing sales			698				680				748				589				2,715				378				372				337				341				1,428
Other sales			11				11				8				5				35				4				4				1				4				13
			882				859				900				770				3,411				529				608				589				570				2,296
Intrasegment eliminations			(77	)			(76	)			(72	)			(74	)			(299	)			(54	)			(61	)			(60	)			(61	)			(236	)
Total revenues			805				783				828				696				3,112				475				547				529				509				2,060
Segment costs and expenses:
NGL cost of goods sold			28				20				19				23				90				19				16				14				15				64
Olefins cost of goods sold			51				69				46				65				231				62				101				89				77				329
Marketing cost of goods sold			684				681				752				629				2,746				381				376				340				340				1,437
Other cost of goods sold			12				10				8				7				37				6				4				2				5				17
Net insurance recoveries—Geismar Incident			(119	)			(42	)			—				(71	)			(232	)			—				(126	)			—				—				(126	)
Other segment costs and expenses (1)			54				58				70				83				265				66				88				71				71				296
Intrasegment eliminations			(77	)			(76	)			(72	)			(74	)			(299	)			(54	)			(61	)			(60	)			(61	)			(236	)
Total segment costs and expenses			633				720				823				662				2,838				480				398				456				447				1,781
Proportional Modified EBITDA of equity-method investments			10				9				12				19				50				11				9				12				10				42
Modified EBITDA			182				72				17				53				324				6				158				85				72				321
Adjustments			54				96				5				(66	)			89				1				(125	)			—				—				(124	)
Adjusted EBITDA		$	236			$	168			$	22			$	(13	)		$	413			$	7			$	33			$	85			$	72			$	197
Operating statistics
Ethane equity sales (million gallons)			27				28				28				33				116				36				33				40				34				143
Non-ethane equity sales (million gallons)			30				18				19				35				102				39				32				29				41				141
NGL equity sales (million gallons)			57				46				47				68				218				75				65				69				75				284
Ethane production (million gallons)			29				29				29				34				121				36				33				40				35				144
Non-ethane production (million gallons)			30				28				28				31				117				31				27				34				29				121
NGL production (million gallons)			59				57				57				65				238				67				60				74				64				265
Petrochemical Services
Geismar ethylene sales volumes (million lbs)			—				—				—				—				—				2				213				404				447				1,066
Geismar ethylene margin ($/lb) (2)		$	—			$	—			$	—			$	—			$	—			$	—			$	0.21			$	0.16			$	0.11				0.15
Canadian propylene sales volumes (million lbs)			32				34				34				43				143				39				38				44				40				161
Canadian alky feedstock sales volumes (million gallons)			7				7				6				7				27				7				6				6				7				26
Overland Pass Pipeline Company LLC (equity investment)—100%
NGL Transportation volumes (Mbbls)			8,612				8,926				9,482				10,118				37,138				10,845				13,860				15,075				15,527				55,307

 

(1)	Includes operating expenses, general and administrative expenses, and other income or expenses, such as certain noncash impairments and other items.

 

(2)

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

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Williams Partners L.P.

Capital Expenditures and Investments

(UNAUDITED)

 

		2014																				2015
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year
Capital expenditures:
Access Midstream		$	—			$	—			$	165			$	133			$	298			$	133			$	109			$	107			$	83			$	432
Northeast G&P			359				291				288				253				1,191				115				114				95				75				399
Atlantic-Gulf			180				412				319				387				1,298				361				384				383				376				1,504
West			22				27				120				100				269				50				52				47				56				205
NGL & Petchem Services			161				211				136				120				628				75				55				59				63				252
Other			2				2				1				3				8				1				1				1				—				3
Total*		$	724			$	943			$	1,029			$	996			$	3,692			$	735			$	715			$	692			$	653			$	2,795
Purchase of businesses:
Access Midstream		$	—			$	—			$	—			$	—			$	—			$	—			$	112			$	—			$	—			$	112
NGL & Petchem Services**			25				31				—				(56	)			—				—				—				—				—				—
Total		$	25			$	31			$	—			$	(56	)		$	—			$	—			$	112			$	—			$	—			$	112
Purchase of investments:
Access Midstream		$	—			$	—			$	65			$	105			$	170			$	50			$	393			$	—			$	65			$	508
Northeast G&P			163				6				12				7				188				10				5				29				(4	)			40
Atlantic-Gulf			51				9				21				25				106				20				—				15				—				35
NGL & Petchem Services			1				1				1				1				4				3				2				1				5				11
Total		$	215			$	16			$	99			$	138			$	468			$	83			$	400			$	45			$	66			$	594
Summary:
Access Midstream		$	—			$	—			$	230			$	238			$	468			$	183			$	614			$	107			$	148			$	1,052
Northeast G&P			522				297				300				260				1,379				125				119				124				71				439
Atlantic-Gulf			231				421				340				412				1,404				381				384				398				376				1,539
West			22				27				120				100				269				50				52				47				56				205
NGL & Petchem Services			187				243				137				65				632				78				57				60				68				263
Other			2				2				1				3				8				1				1				1				—				3
Total		$	964			$	990			$	1,128			$	1,078			$	4,160			$	818			$	1,227			$	737			$	719			$	3,501
Capital expenditures incurred, purchase of businesses, and purchase of investments:
Increases to property, plant, and equipment		$	769			$	867			$	1,017			$	918			$	3,571			$	645			$	731			$	673			$	600			$	2,649
Purchase of businesses			25				31				—				(56	)			—				—				112				—				—				112
Purchase of investments			215				16				99				138				468				83				400				45				66				594
Total		$	1,009			$	914			$	1,116			$	1,000			$	4,039			$	728			$	1,243			$	718			$	666			$	3,355
*Increases to property, plant, and equipment		$	769			$	867			$	1,017			$	918			$	3,571			$	645			$	731			$	673			$	600			$	2,649
Changes in related accounts payable and accrued liabilities			(45	)			76				12				78				121				90				(16	)			19				53				146
Capital expenditures		$	724			$	943			$	1,029			$	996			$	3,692			$	735			$	715			$	692			$	653			$	2,795

 

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