- Wamsutter, Discovery Acquisitions Drive 45% Increase in
Distributable Cash Flow per Unit During 1Q TULSA, Okla., May 1
/PRNewswire-FirstCall/ -- Williams Partners L.P. (NYSE:WPZ) today
announced unaudited first-quarter 2008 net income of $43.6 million,
compared with first-quarter 2007 net income of $25.1 million.
Williams Partners' net income per limited-partner unit for
first-quarter 2008 was 66 cents, compared with 31 cents per
limited-partner unit for first-quarter 2007. Increased equity
earnings from the partnership's Wamsutter and Discovery investments
and higher natural gas liquid margins at Four Corners were the key
drivers of the improved earnings per unit in first-quarter 2008.
Also, because the partnership's 2007 acquisitions of an additional
20 percent of Discovery and a membership interest in Wamsutter
closed later in the year, their first-quarter 2007 net income was
allocated to the general partner as pre-partnership income. As a
result, a higher portion of the partnership's total net income was
allocated to the limited partners in first-quarter 2008, compared
with first-quarter 2007. Lower gathering and processing volumes and
higher operating and maintenance expenses at Four Corners, and
higher interest expense due to the Wamsutter acquisition partially
offset these benefits. First-quarter 2007 results throughout this
release have been recast to reflect the Wamsutter and Discovery
acquisitions. In first-quarter 2008, the key measure of
distributable cash flow per weighted-average limited partner unit
was 74 cents, compared with 51 cents for first-quarter 2007 -- an
increase of 45 percent. Total distributable cash flow in
first-quarter 2008 for limited-partner unitholders was $38.8
million, compared with $20 million for first-quarter 2007. The
significant increase in distributable cash flow during
first-quarter 2008 is due to the partnership receiving its first
cash distribution associated with the Wamsutter investment, as well
as a record-high distribution associated with its Discovery
investment. Business Segment Performance Business segment
performance includes results for the partnership's three business
segments: Gathering and Processing -- West, which includes Four
Corners and the Wamsutter investment; Gathering and Processing --
Gulf, which includes the Discovery investment; and NGL Services,
which includes the Conway fractionation and storage complex.
Consolidated Segment Profit 1Q Amounts in thousands 2008 2007
Gathering and Processing - West $50,405 $42,604 Gathering and
Processing - Gulf 13,511 3,638 NGL Services 5,541 53 Consolidated
Segment Profit $69,457 $46,295 Recurring Consolidated Segment
Profit* Amounts in thousands Gathering and Processing - West
$47,340 $42,885 Gathering and Processing - Gulf 13,511 3,638 NGL
Services 5,541 1,490 Recurring Consolidated Segment Profit* $66,392
$48,013 * A schedule reconciling segment profit to recurring
segment profit is attached to this press release. Williams
Partners' consolidated recurring segment profit for first-quarter
2008 was $66.4 million, compared with $48 million for first-quarter
2007. Recurring segment profit for Gathering and Processing -- West
was $47.3 million in first-quarter 2008, compared with $42.9
million in first-quarter 2007. Higher NGL margins at Four Corners
and the Wamsutter investment were the primary drivers of the
quarterly improvement. Lower gathering and processing volumes at
Four Corners, due to severe winter weather and the shutdown of the
Ignacio gas processing plant following the Nov. 28, 2007, fire,
partially offset these benefits. The Ignacio plant returned to
service on Jan. 18. Also, both Wamsutter and Four Corners
experienced higher net product imbalance losses during the first
quarter of 2008. Gains and losses from product imbalances are an
unpredictable component of operating costs. Recurring segment
profit for the Gathering and Processing -- Gulf segment was $13.5
million in first-quarter 2008, compared with $3.6 million in
first-quarter 2007. Higher equity earnings from the partnership's
Discovery interest were the primary source of the improvement.
Discovery's results increased due to higher gross processing
margins and higher gathered volumes in the first quarter. NGL
Services reported recurring segment profit of $5.5 million for
first-quarter 2008, compared with $1.5 million for first-quarter
2007. Higher fractionation and storage revenues and lower operating
costs drove the increase in segment profit. Reconciliations of the
partnership's distributable cash flow for limited-partner
unitholders to net income, as well as recurring segment profit to
segment profit, are available on Williams Partners' web site at
http://www.williamslp.com/ and as an attachment to this document.
Chief Operating Officer Perspective "The partnership performed
extremely well during the first quarter, highlighted by a
45-percent increase in our distributable cash flow per unit," said
Alan Armstrong, chief operating officer of the general partner of
Williams Partners. "We're now seeing the benefit of our 2007
acquisitions -- Wamsutter and the additional interest in Discovery,
both of which contributed significant cash flow to the partnership
in the first quarter. "Operationally, our Conway and Discovery
businesses performed extremely well, and both Four Corners and
Wamsutter posted terrific financial performances despite long
periods of severe winter weather that halted our customers'
production in those areas. We are glad to see that production flows
have returned to normal after the very difficult winter," Armstrong
said. Increase in Cash Distribution to Unitholders Subsequent to
the close of the first quarter, the board of directors of the
general partner of Williams Partners increased the quarterly cash
distribution payable to unitholders to 60 cents from 57.5 cents.
This was the ninth consecutive quarter the partnership increased
its cash distribution. Distributable Cash Flow and Recurring
Segment Profit Definitions Distributable cash flow per weighted
average limited-partner unit is a key measure of the partnership's
financial performance and available cash flows to unitholders.
Williams Partners defines distributable cash flow per
limited-partner unit as distributable cash flow, as defined in the
following paragraph, attributable to partnership operations plus
the cash distributed by Wamsutter and Discovery. The total
distributable cash flow attributable to partnership operations is
then allocated among the general partner and the limited partners
in accordance with the cash-distribution provisions of our
partnership agreement. The resulting distributable cash flow
attributable to partnership operations and to its limited partners
is then divided by the weighted average limited partner-units
outstanding to arrive at distributable cash flow per
limited-partner unit. Williams Partners defines distributable cash
flow as net income plus depreciation, amortization and accretion,
and the amortization of a natural gas purchase contract, less its
equity earnings in Wamsutter and Discovery, as well as adjustments
for certain non-cash, non-recurring items, plus reimbursements from
Williams under an omnibus agreement and less maintenance capital
expenditures. Williams Partners defines recurring segment profit as
segment profit excluding items of income or loss that it
characterizes as unrepresentative of its ongoing operations.
Schedules presenting Williams Partners' consolidated statements of
income, segment profit and operating information are available on
Williams Partners' web site at http://www.williamslp.com/ and as an
attachment to this document. Today's Analyst Call Williams
Partners' management will discuss the partnership's first-quarter
2008 financial results during an analyst presentation to be webcast
live beginning at 11 a.m. Eastern today. Participants are
encouraged to access Williams Partners' webcast at
http://www.williamslp.com/. Slides will be available for viewing,
downloading and printing. A limited number of phone lines also will
be available for the partnership's webcast at (877) 857-6177.
International callers should dial (719) 325-4816. Replays of the
first-quarter webcast, in both streaming and downloadable podcast
formats, will be available for two weeks at
http://www.williamslp.com/ following the event. Form 10-Q The
partnership has filed its Form 10-Q with the Securities and
Exchange Commission. The document is available on both the SEC and
Williams Partners web sites. About Williams Partners L.P.
(NYSE:WPZ) Williams Partners L.P. is a publicly traded master
limited partnership that owns natural gas gathering,
transportation, processing and treating assets serving regions
where producers require large scale and highly reliable services,
including the Gulf of Mexico, the San Juan Basin in New Mexico and
Colorado, and the Washakie Basin in Wyoming. The partnership also
serves the natural gas liquids (NGL) market through its NGL
fractionating and storage assets. The general partner is Williams
Partners GP LLC. More information about the partnership is
available at http://www.williamslp.com. Go to
http://www.b2i.us/irpass.asp?BzID=1296&to=ea&s=0 to join
our e-mail list. Contact: Jeff Pounds Williams (media relations)
(918) 573-3332 Sharna Reingold Williams (investor relations) (918)
573-2078 Williams Partners' reports, filings and other public
announcements might contain or incorporate by reference
forward-looking statements -- statements that do not directly or
exclusively relate to historical facts. You typically can identify
forward-looking statements by the use of forward-looking words,
such as "anticipate," believe," "could," "continue," "estimate,"
"expect," "forecast," "may," "plan," "potential," "project,"
"schedule," "will" and other similar words. These statements are
based on our intentions, beliefs and assumptions about future
events and are subject to risks, uncertainties and other factors.
Actual results could differ materially from those contemplated by
the forward-looking statements. In addition to any assumptions,
risks, uncertainties and other factors referred to specifically in
connection with such statements, other factors could cause our
actual results to differ materially from the results expressed or
implied in any forward-looking statements. Those risks,
uncertainties and factors include, among others: Williams Partners
may not have sufficient cash from operations to enable it to pay
the minimum distribution following establishment of cash reserves
and payment of fees and expenses, including payments to our general
partner; because of the natural decline in production from existing
wells and competitive factors, the success of Williams Partners'
gathering and transportation businesses depends on its ability to
connect new sources of natural gas supply, which is dependent on
factors beyond its control; any decrease in supplies of natural gas
could adversely affect Williams Partners' business and operating
results; lower natural gas and oil prices could adversely affect
Williams Partners' fractionation and storage businesses; Williams
Partners' processing, fractionation and storage businesses could be
affected by any decrease in natural gas liquids (NGL) prices or a
change in NGL prices relative to the price of natural gas; Williams
Partners depends on certain key customers and producers for a
significant portion of its revenues and supply of natural gas and
NGLs and the loss of any of these key customers or producers could
result in a decline in its revenues and cash available to pay
distributions; if third-party pipelines and other facilities
interconnected to Williams Partners' pipelines and facilities
become unavailable to transport natural gas and NGLs or to treat
natural gas, Williams Partners' revenues and cash available to pay
distributions could be adversely affected; Williams Partners does
not own all of the interests in Wamsutter LLC (Wamsutter), the
Conway fractionator or Discovery Producer Services LLC (Discovery),
which could adversely affect Williams Partners' ability to operate
and control these assets in a manner beneficial to it; Williams
Partners' results of storage and fractionation operations are
dependent upon the demand for propane and other NGLs and a
substantial decrease in this demand could adversely affect Williams
Partners' business and operation results; Discovery and Wamsutter
may reduce their cash distributions to Williams Partners in some
situations; Discovery's interstate tariff rates and terms and
conditions are subject to review and possible adjustment by federal
regulators and are subject to changes in policy by federal
regulators, which could have a material adverse effect on Williams
Partner's business and operating results; Williams Partners'
operations are subject to operational hazards and unforeseen
interruptions for which it may not be adequately insured; Williams
Partners does not operate all of its assets and its reliance on
others to operate its assets and to provide other services could
adversely affect Williams Partners' business and operating results.
Williams Partners' partnership agreement limits its general
partner's fiduciary duties to unitholders and restricts the
remedies available to unitholders for actions taken by its general
partner that might otherwise constitute breaches of fiduciary duty;
The Williams Companies, Inc.'s (Williams) public indentures and
Williams Partners' credit facility contain financial and operating
restrictions that may limit its access to credit; in addition,
Williams Partners' ability to obtain credit in the future will be
affected by Williams' credit ratings; Williams Partners' future
financial and operating flexibility may be adversely affected by
restrictions in Williams Partners' debt agreements and by its
leverage; Williams Partners has a holding company structure in
which its subsidiaries conduct its operations and own its operating
assets, which may affect Williams Partners' ability to make
payments on its debt obligations and distributions on its common
units; common units held by Williams eligible for future sale may
have adverse effects on the price of Williams Partners' common
units; Williams controls Williams Partners' general partner, which
has sole responsibility for conducting Williams Partners' business
and managing its operations; Williams Partners' general partner and
its affiliates have conflicts of interests with Williams Partners
and limited fiduciary duties, and they may favor their own
interests to the detriment of Williams Partners' unitholders; even
if unitholders are dissatisfied, they currently have little ability
to remove Williams Partners' general partner without its consent.
In light of these risks, uncertainties and assumptions, the events
described in the forward-looking statements might not occur or
might occur to a different extent or at a different time than we
have described. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Investors are urged to
closely consider the disclosures and risk factors in Williams
Partners' reports on Forms 10-K and 10-Q filed with the Securities
and Exchange Commission available from Williams Partners' offices
or from Williams Partners' website at http://www.williamslp.com.
Reconciliation of Non-GAAP Measures (UNAUDITED) This press release
includes certain financial measures, Recurring Segment Profit,
Distributable Cash Flow and Distributable Cash Flow per Limited
Partner Unit that are non-GAAP financial measures as defined under
the rules of the Securities and Exchange Commission. For Williams
Partners L.P., Recurring Segment Profit excludes items of income or
loss that we characterize as unrepresentative of our ongoing
operations. Management believes Recurring Segment Profit provides
investors meaningful insight into Williams Partners L.P.'s results
from ongoing operations. For Williams Partners L.P. we define
Distributable Cash Flow as net income (loss) plus depreciation,
amortization and accretion, and the amortization of a natural gas
purchase contract, less our earnings from equity investments, as
well as adjustments for certain non-cash, non-recurring items, plus
reimbursements from Williams under an omnibus agreement and less
maintenance capital expenditures. For our equity investments,
Wamsutter and Discovery, we define Distributable Cash Flow as net
income (loss) plus depreciation, amortization and accretion and
less maintenance capital expenditures. We also adjust for certain
non-cash, non-recurring items. Our equity share of Wamsutter's
Distributable Cash Flow is based on the distribution provisions of
the Wamsutter LLC Agreement. Our equity share of Discovery's
Distributable Cash Flow is 60%. For Williams Partners L.P. we
define Distributable Cash Flow per Limited Partner Unit as
Distributable Cash Flow, as defined in the preceding paragraph,
attributable to partnership operations plus the actual cash
distributed by Wamsutter and Discovery. The total Distributable
Cash Flow attributable to partnership operations is then allocated
between the general partner and the limited partners in accordance
with the cash distribution provisions of our partnership agreement.
The resulting Distributable Cash Flow attributable to partnership
operations and to its limited partners is then divided by the
weighted average limited partner units outstanding to arrive at
Distributable Cash Flow per Limited Partner Unit. This press
release is accompanied by a reconciliation of these non-GAAP
financial measures to their nearest GAAP financial measures.
Management uses these financial measures because they are accepted
financial indicators used by investors to compare company
performance. In addition, management believes that these measures
provide investors an enhanced perspective of the operating
performance of the Partnership's assets and the cash that the
business is generating. Neither Recurring Segment Profit nor
Distributable Cash Flow are intended to represent cash flows for
the period, nor are they presented as an alternative to net income
(loss) or cash flow from operations. Distributable Cash Flow per
Limited Partner is not presented as an alternative to net income
per unit. They should not be considered in isolation or as
substitutes for a measure of performance prepared in accordance
with United States generally accepted accounting principles. 2007*
2008 (Thousands, except per-unit amounts) 1st Qtr 1st Qtr Williams
Partners L.P. Reconciliation of Non-GAAP "Recurring Segment Profit"
to GAAP "Segment Profit" Gathering and Processing - West $42,604
$50,405 Gathering and Processing - Gulf 3,638 13,511 NGL Services
53 5,541 Segment Profit 46,295 69,457 Non-recurring Items:
Gathering and Processing - West Wamsutter customer contract
adjustment included in equity earnings - (3,065) 2005-2006
retroactive charges for customer contract (848) - Adjust
right-of-way prepaid expense 1,243 - Adjust 2006 incentive
compensation accrual (899) - Adjust asset retirement obligation 785
- NGL Services Product imbalance valuation adjustment 1,437 -
Recurring Segment Profit $48,013 $66,392 * Because Wamsutter and
the additional 20% interest in Discovery were affiliates of
Williams at the time of these acquisitions, the transactions were
between entities under common control, and have been accounted for
at historical cost. Accordingly, these tables have been recast to
reflect the historical results of Wamsutter and Equity Earnings in
Discovery throughout the periods presented. 2007* 2008 (Thousands,
except per-unit amounts) 1st Qtr 1st Qtr Williams Partners L.P.
Reconciliation of Non-GAAP "Distributable Cash Flow per Limited
Partner Unit "GAAP "Net income" Net income $25,137 $43,629
Depreciation, amortization and accretion 13,178 1,226 Amortization
of natural gas purchase contract 1,188 - Non-cash amortization of
debt issuance costs included in interest expense 404 489 Equity
earnings (15,259) (34,815) Reimbursements from Williams under
omnibus agreement 842 771 Maintenance capital expenditures(a)
(7,621) (8,534) Distributable Cash Flow Excluding Equity
Investments $17,869 $12,766 Plus: Wamsutter cash distributions to
Williams Partners L.P. - 22,704 Plus: Discovery's cash
distributions to Williams Partners L.P. 3,600 16,800 Distributable
cash flow attributable to partnership operations 21,469 52,270
Distributable Cash Flow attributable to partnership operations
allocable to general partner 1,487 13,431 Distributable Cash Flow
attributable to limited partnership operations allocable to limited
partners $19,982 $38,839 Weighted average number of units
outstanding: 39,358,798 52,774,728 Distributable Cash Flow
attributable to partnership operations per limited partner unit:
$0.51 $0.74 (a) Maintenance capital expenditures includes certain
well connection capital. Wamsutter Reconciliation of Non-GAAP
"Distributable Cash Flow" to GAAP "Net income" Net income $11,328
$21,194 Depreciation, amortization and accretion 4,258 5,228
Maintenance capital expenditures (4,535) (3,245) Distributable Cash
Flow - 100% $11,051 $23,177 Discovery Producer Services
Reconciliation of Non-GAAP "Distributable Cash Flow" to GAAP "Net
income" Net income $6,551 $22,701 Depreciation, amortization and
accretion 6,483 6,983 Maintenance capital expenditures (429) (187)
Distributable Cash Flow - 100% $12,605 $29,497 Distributable Cash
Flow - our 60% interest $7,563 $17,698 * Because Wamsutter and the
additional 20% interest in Discovery were affiliates of Williams at
the time of these acquisitions, the transactions were between
entities under common control, and have been accounted for at
historical cost. Accordingly, these tables have been recast to
reflect the historical results of Wamsutter and Equity Earnings in
Discovery throughout the periods presented. Consolidated Statements
of Income (UNAUDITED) 2007* 2008 (Thousands, except per-unit
amounts) 1st Qtr 1st Qtr Revenues: Product sales: Affiliate $56,552
$78,122 Third-party 6,313 4,221 Gathering and processing: Affiliate
9,491 8,790 Third-party 51,103 46,210 Storage 6,410 7,333
Fractionation 1,917 3,292 Other 2,029 2,394 Total revenues 133,815
150,362 Cost and expenses: Product cost and shrink replacement:
Affiliate 21,725 22,033 Third-party 20,470 30,065 Operating and
maintenance expense: Affiliate 14,328 23,133 Third-party 28,185
23,951 Depreciation, amortization and accretion 13,178 11,226
General and administrative expense: Affiliate 9,406 9,876
Third-party 664 928 Taxes other than income 2,114 2,505 Other 460
333 Total costs and expenses 110,530 124,050 Operating income
23,285 26,312 Equity earnings - Wamsutter 11,328 21,194 Equity
earnings - Discovery 3,931 13,621 Interest expense: Affiliate (15)
(25) Third-party (14,375) (17,711) Interest income 983 238 Net
income $25,137 $43,629 Allocation of net income* Net income $25,137
$43,629 Allocation of net income to general partner 12,912 8,911
Allocation of net income to limited partners 12,225 34,718 Net
income, per common and subordinated unit $0.31 $0.66 Weighted
average number of units outstanding 39,358,798 52,774,728 * Because
Wamsutter and the additional 20% interest in Discovery were
affiliates of Williams at the time of these acquisitions, the
transactions were between entities under common control, and have
been accounted for at historical cost. Accordingly, these tables
have been recast to reflect the historical results of Wamsutter and
Equity Earnings in Discovery throughout the periods presented. Net
income applicable to periods before the acquisitions of these
businesses is fully allocated to our general partner, which results
in no impact to net income per limited partner unit. Segment Profit
& Operating Statistics (UNAUDITED) 2007* 2008 (Thousands) 1st
Qtr 1st Qtr Gathering and Processing - West Segment revenues
$120,428 $132,333 Product cost and shrink replacement 39,675 47,446
Operating and maintenance expense 33,097 40,893 Depreciation,
amortization and accretion 12,175 10,299 Direct general and
administrative expenses 1,821 1,930 Other, net 2,384 2,554 Segment
operating income 31,276 29,211 Equity earnings 11,328 21,194
Segment profit $42,604 $50,405 Gathering and Processing - Gulf
Segment revenues $561 $567 Operating and maintenance expense 550
524 Depreciation and accretion 304 153 Direct general and
administrative expenses - - Other, net - - Segment operating loss
(293) (110) Equity earnings 3,931 13,621 Segment profit $3,638
$13,511 NGL Services Segment revenues $12,826 $17,462 Product cost
2,520 4,652 Operating and maintenance expense 8,866 5,667
Depreciation and accretion 699 774 Direct general and
administrative expenses 498 544 Other, net 190 284 Segment profit
$53 $5,541 * Because Wamsutter and the additional 20% interest in
Discovery were affiliates of Williams at the time of these
acquisitions, the transactions were between entities under common
control, and have been accounted for at historical cost.
Accordingly, these tables have been recast to reflect the
historical results of Wamsutter and Equity Earnings in Discovery
throughout the periods presented. Williams Partners: Conway storage
revenues $6,410 $7,333 Conway fractionation volumes (bpd) - our 50%
31,316 33,103 Carbonate Trend gathering volumes (BBtu/d) 25 24
Williams Four Corners: Gathering volumes (BBtu/d) 1,453 1,316
Fee-based processing volumes (BBtu/d) 866 796 NGL equity sales
(million gallons) 46 36 NGL margin ($/gallon) $0.41 $0.74 NGL
production (million gallons) 140 112 Wamsutter - 100%: Gathering
volumes (BBtu/d) 510 434 Fee-based processing volumes (BBtu/d) 302
252 NGL equity sales (million gallons) 28 41 NGL margin ($/gallon)
$0.27 $0.58 NGL production (million gallons) 101 106 Discovery
Producer Services - 100% Plant inlet volumes (BBtu/d) 548 627 Gross
processing margin ($/MMBtu) $0.23 $0.45 NGL equity sales (million
gallons) 18 37 NGL production (million gallons) 56 70 DATASOURCE:
Williams Partners L.P. CONTACT: Media relations, Jeff Pounds,
+1-918-573-3332, or investor relations, Sharna Reingold,
+1-918-573-2078, both of Williams Partners L.P. Web site:
http://www.williams.com/
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