- Distributable Cash Flow From
Partnership’s Operations $367 Million; Lower as Expected, Due to
Geismar Outage
- Geismar Plant Startup in November
Consistent With Previous Guidance
- 3Q 2014 Net Income Is $217 Million or
$0.07 per Common Unit
- Reaffirming 2014-2016 Financial
Guidance; Near-Term Growth Drivers Include Three Major Projects
Expected to Be In-Service in 4Q Generating Approximately $1 Billion
in 2015 Cash Flow
- WPZ and ACMP Agree to Merger, Creating
Large-Cap MLP with Expected Best-in-Class 10% to 12% Annual Cash
Distribution Growth Through 2017
- Merged MLP Expects Strong Cash Coverage
At or Above 1.1x or Aggregate of $1.1 Billion Excess Cash Flow
Through 2017
Williams Partners L.P. (NYSE: WPZ):
Summary Financial Information 3Q
YTD Amounts in millions, except per-unit and coverage
ratio amounts. All income amounts attributable to Williams Partners
L.P. 2014 2013 2014 2013 (Unaudited)
Distributable cash flow (DCF) (1) $ 367 $ 394 $ 1,476 $ 1,326 Less:
Pre-partnership DCF (2) - (16 ) (23 )
(64 ) DCF attributable to partnership operations $ 367 $ 378
$ 1,453 $ 1,262 Cash distribution coverage
ratio (1) .63x .86x .84x .90x Adjusted segment profit +
DD&A (1) $ 575 $ 595 $ 2,065 $ 1,898 Net income $ 217 $
284 $ 801 $ 899 Net income per common L.P. unit $ 0.07 $ 0.52 $
0.53 $ 1.34
(1) Distributable Cash Flow, Cash Distribution Coverage Ratio
and Adjusted Segment Profit + DD&A are non-GAAP measures.
Reconciliations to the most relevant measures included in GAAP are
attached to this news release.
(2) This amount represents DCF from the Canadian asset dropdown
(acquired February 2014) for periods prior to acquisition by the
partnership.
Williams Partners L.P. (NYSE: WPZ) today announced $367 million
in distributable cash flow (DCF) attributable to partnership
operations in third-quarter 2014, compared with $378 million in DCF
attributable to partnership operations in third-quarter 2013.
The $11 million decrease in DCF for the quarter was driven by a
number of both positive and negative factors. Increases of $35
million in fee-based revenues, $37 million in cash distributions
from equity methods investments and $31 million of DCF from the
Canadian asset dropdown were offset by a $45 million decrease in
natural gas liquids (NGL) and marketing margins, a $24 million
increase in maintenance capital expenditures and a $24 million
increase in net interest expense. The Geismar plant was off-line
for both periods; however, business interruption insurance proceeds
in the third quarter of 2013 totaling $15 million were included in
the calculation of DCF. The partnership estimates that DCF would
have been approximately $200 million higher had the expanded
Geismar plant been in operation during the third quarter. The
partnership expects the expanded Geismar plant to be placed into
service in November 2014.
The partnership reported year-to-date DCF of $1.453 billion,
compared with $1.262 billion year-to-date 2013. The $191 million,
or 15 percent year-over-year DCF growth, was driven by $144 million
growth in fee-based revenues compared with year-to-date 2013, as
well as $68 million in higher Geismar results, which include the
favorable impacts of assumed business interruption insurance
proceeds. Cash distributions from equity method investments were
$55 million higher in 2014. Partially offsetting these increases
were $89 million lower NGL margins and $55 million of higher net
interest expense.
For third-quarter 2014, Williams Partners generated $575 million
in adjusted segment profit + DD&A, compared with $595 million
in third-quarter 2013. Fee-based revenue was up $35 million, more
than offset by $45 million lower NGL and marketing margins and
other factors.
Year-to-date adjusted segment profit + DD&A was $2.065
billion, compared with $1.898 billion year-to-date 2013. The $167
million increase in year-to-date adjusted segment profit + DD&A
was driven primarily by the same factors that drove the favorable
increase in year-to-date DCF detailed above.
Williams Partners reported unaudited third-quarter 2014 net
income attributable to controlling interests of $217 million, or
$0.07 per common limited-partner unit, compared with net income of
$284 million, or $0.52 per common limited-partner unit for
third-quarter 2013. Prior-period results throughout this release
have been recast to include the results of the Canadian asset
dropdown in February 2014.
The decrease in third-quarter net income was primarily due to
the ongoing effects of the June 13, 2013 Geismar incident, where
the 2013 period included the receipt of $50 million of related
insurance recoveries. Additionally, the 2014 period was unfavorably
affected by $28 million lower natural gas liquids (NGL) margins and
$24 million in higher net interest expense. These unfavorable
effects were partially offset by a $35 million increase in
fee-based revenues in third-quarter 2014 compared with the year-ago
period.
Year-to-date through Sept. 30, Williams Partners reported net
income of $801 million, or $0.53 per common limited-partner unit,
compared with $899 million, or $1.34 per common limited-partner
unit, for the first nine months of 2013.
Fee-based revenue was up $144 million year-to-date, offset by
$89 million, or 23 percent, lower NGL margins and $93 million lower
Geismar results. Additionally, the 2014 period was unfavorably
affected by $55 million higher net interest expense and $36 million
higher depreciation primarily associated with ongoing growth in our
Northeast G&P segment.
Williams Partners recently announced that it increased its
quarterly cash distribution to unitholders to $0.9285 per unit, a
5.8 percent increase over the prior year amount.
CEO Perspective
Alan Armstrong, chief executive officer of Williams Partners’
general partner, made the following comments:
“Williams Partners’ results for the quarter were in line with
our expectations. The lower results versus normal operations were
due primarily to the Geismar outage and the first full-quarter
without the assumed benefit of Geismar-related
business-interruption insurance proceeds.
“We expect dramatically higher results for Williams Partners in
the fourth quarter and 2015. In November and December, we plan to
place several major projects into service, including the expanded
Geismar plant, the Gulfstar One facility and the Keathley Canyon
Connector pipeline. All three of these large-scale projects are
mechanically complete and are expected to generate nearly $1
billion in 2015 cash flows,” Armstrong said.
“We recently received strong customer interest in new major
natural gas infrastructure projects, Transco’s Appalachian
Connector and Diamond East pipelines. Both are designed to connect
growing Transco markets to abundant, economically priced Marcellus
and Utica supply. On the regulatory front, we achieved a key
milestone with the FERC’s issuance last week of its final
environmental impact statement for the Constitution Pipeline
project. We’re pursuing the federal and state permits we need in an
effort to begin construction as early as the first quarter of 2015.
This schedule is critical to our ability to bring the Constitution
Pipeline in service in time for the winter 2015-16 heating season
in New York and New England.
“Earlier this week, we took another big step toward our goal of
becoming the leading provider of large-scale natural gas
infrastructure in North America when Williams Partners and Access
Midstream agreed to merge. The merged MLP is expected to be one of
the largest and fastest growing MLPs with rich opportunities across
the natural gas infrastructure value chain and expected
best-in-class distribution growth.”
Business Segment Performance
Williams Partners 3Q - 2014
3Q - 2013 Amounts in millions
Segment Profit Adj.**
Adj. Segment Profit* Adj. Segment Profit +
DD&A* Segment Profit Adj.**
Adj. Segment Profit* Adj.
Segment Profit + DD&A* Northeast G&P $ 35
($12 ) $ 23 $ 64 ($1 ) $
9 $ 8 $ 41 Atlantic-Gulf 162 0 162 253
137 5 142 234 West 175 0 175 235 207 0 207 265 NGL & Petchem
Services 1 5
6 23 68
(31 ) 37 55 Total
$ 373
($7 ) $
366 $ 575
$ 411
($17 ) $
394 $ 595
YTD - 2014 YTD - 2013 Segment
Profit Adj.** Adj.
Segment Profit* Adj. Segment Profit +
DD&A* Segment Profit Adj.**
Adj. Segment Profit* Adj.
Segment Profit + DD&A* Northeast G&P $ 56 $ 11 $ 67 $
187 $ 2 $ 9 $ 11 $ 105 Atlantic-Gulf 495 0 495 771 448 (6 ) 442 714
West 492 6 498 676 555 0 555 732 NGL & Petchem Services
226 155 381
431 327 (25 )
302 347 Total
$ 1,269 $
172 $
1,441 $ 2,065
$ 1,332
($22 ) $
1,310 $ 1,898
*Schedules reconciling segment profit to adjusted segment profit
and adjusted segment profit + DD&A are attached to this news
release.
**Adjustments for year-to-date 2014 periods consist primarily of
assumed business interruption insurance related to the Geismar
plant. Year-to-date 2014 assumes $311 million of business
interruption insurance offset by actual insurance recoveries of
$175 million.
Northeast G&P
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-percent equity investment in Caiman Energy II. This
segment is in the early stages of developing large-scale energy
infrastructure solutions for the Marcellus and Utica shale
regions.
Northeast G&P reported adjusted segment profit + DD&A of
$64 million for third-quarter 2014, compared with $41 million in
third-quarter 2013. Year-to-date through Sept 30, Northeast G&P
reported adjusted segment profit + DD&A of $187 million,
compared with $105 million for the first nine months of 2013.
The third-quarter 2014 results include $20 million in higher
fee-based revenues driven by 23 percent higher average daily
gathered volumes versus third-quarter 2013. Adjustments to reported
segment profit include the removal of $15 million in income related
to the partial release of an acreage dedication. The year-to-date
results were driven primarily by the same factors that drove the
quarterly results.
Atlantic-Gulf
Atlantic-Gulf includes the Transco interstate gas pipeline and
the partnership’s significant natural gas gathering and processing
and crude production handling and transportation in the Gulf Coast
region. These operations include the partnership’s 51-percent
consolidated interest in the Gulfstar development project, as well
as its 50-percent interest in Gulfstream and a 60-percent interest
in Discovery. The segment also includes a 41-percent consolidated
interest in the Constitution interstate gas pipeline development
project.
Atlantic-Gulf reported adjusted segment profit + DD&A of
$253 million for third-quarter 2014, compared with $234 million for
third-quarter 2013. Year-to-date through Sept. 30, Atlantic-Gulf
reported adjusted segment profit + DD&A of $771 million,
compared with $714 million for the first nine months of 2013.
Adjusted segment profit + DD&A for the third quarter and
year-to-date 2014 increased primarily due to higher transportation
fee revenues associated with expansion projects. In addition, the
year-to-date increases include new transportation rates effective
in March 2013 for Transco and lower operating expenses.
West
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 third-quarter 2014 adjusted segment profit +
DD&A of $235 million, compared with $265 million for
third-quarter 2013. Year-to-date through Sept. 30, West reported
adjusted segment profit + DD&A of $676 million, compared with
$732 million for the first nine months of 2013.
The lower adjusted segment profit + DD&A during the quarter
and year-to-date period was due to lower NGL margins, primarily
driven by the expiration of a keep-whole processing contract in
September 2013, partially offset by lower operating expenses.
NGL & Petchem Services
NGL & Petchem Services includes an 83.3 percent interest in
an olefins production facility in Geismar, La., along with a
refinery grade propylene splitter and pipelines in the Gulf Coast
region. Following the completion in February 2014 of the dropdown
of Williams’ Canadian operations, this segment now includes
midstream operations in Alberta, Canada, including an oil sands
offgas processing plant near Fort McMurray, 260 miles of NGL and
olefins pipelines and an NGL/olefins fractionation facility and a
butylene/butane splitter facility at Redwater. This segment also
includes the partnership’s energy commodities marketing business,
an NGL fractionator and storage facilities near Conway, Kan. and a
50-percent interest in Overland Pass Pipeline.
NGL & Petchem Services reported third-quarter 2014 adjusted
segment profit + DD&A of $23 million, compared with $55 million
for third-quarter 2013. Year-to-date through Sept. 30, NGL &
Petchem reported adjusted segment profit + DD&A of $431
million, compared with $347 million for the first nine months of
2013. Prior period results have been recast to include the results
of the assets acquired in the Canadian asset dropdown in February
2014.
The decrease in third-quarter adjusted segment profit + DD&A
was primarily due to $32 million lower Geismar results. The Geismar
plant was off-line for both periods; however, the third quarter of
2013 period included $15 million in business interruption insurance
proceeds. The year-to-date increase was driven by $81 million in
higher Geismar results, including assumed business interruption
insurance proceeds of $311 million.
Guidance
Williams Partners’ current guidance for earnings, cash flow and
capital expenditures are unchanged from guidance issued in July
2014; however, this guidance does not reflect the effects of the
merger agreement announced Oct. 26, 2014.
Key elements of the merged MLP’s financial guidance were
disclosed along with the merger announcement and are as
follows:
- 2015 adjusted EBITDA of approximately
$5 billion.
- Pay regular cash distribution in 1Q
2015 in the amount of $0.85 per unit (assuming that the merger
closes before the distribution record date).
- Cash distribution per limited partner
unit for 2015 of $3.65.
- Best-in-class 10 to 12 percent annual
distribution growth in each of 2016 and 2017 and strong growth
beyond.
- Distribution coverage is expected to be
at or above 1.1x or an aggregate of $1.1 billion of excess cash
flow through 2017.
- Strong investment-grade credit ratings
with limited equity needs in current business plan.
The merged MLP expects to provide additional consolidated
guidance following the completion of the merger, which is expected
in early 2015.
Current distributable cash flow guidance for 2014 includes an
assumption of full recovery of property damage and business
interruption insurance proceeds related to the Geismar incident as
well as the successful restart of the Geismar plant in November
2014. Williams Partners has $500 million of combined business
interruption and property damage insurance related to the Geismar
incident (subject to deductibles and other limitations). In the
second quarter, the insurers paid $50 million of the most recent
claim-payment request of $200 million and the total insurance
receipts to-date are $225 million. The insurers continue to
evaluate Williams Partners’ claims and have raised questions around
key assumptions involving our business-interruption claim. As a
result, the insurers have elected to make a partial payment pending
further assessment of these issues.
Williams Partners, in consultation with its independent experts,
presented further support for the partnership’s insurance claim to
our insurers in September 2014 and have agreed with insurers to
non-binding mediation, which is scheduled to begin in late
November, in an effort to advance the resolution of the claim.
The assumed expanded plant restart date and repair cost estimate
are subject to various uncertainties and risks that could cause the
actual results to be materially different from these assumptions.
The assumed property damage and business interruption insurance
proceeds are also subject to various uncertainties and risks that
could cause the actual results to be materially different from
these assumptions.
The partnership’s current guidance for DCF, earnings and capital
expenditures are displayed in the following table. However, the
table does not reflect the effects of the merger agreement
announced Oct. 26, 2014.
Williams Partners Guidance (1) 2014
2015* 2016* Amounts are
in millions except coverage ratio. Low Mid High Low
Mid High Low Mid High
DCF
attributable to partnership ops. (2) $ 1,800 $ 1,950
$ 2,100 $ 2,605 $ 2,785 $ 2,965 $ 2,800
$ 3,085 $ 3,370
Total Cash Distribution (3) $
2,340 $ 2,370 $ 2,400 $ 2,632 $ 2,714 $ 2,796 $ 2,868 $ 2,950 $
3,032
Cash Distribution Coverage Ratio (2) .77x .82x
.88x .99x 1.03x 1.06x .98x 1.05x 1.11x
Adjusted Segment
Profit (2): $ 1,860 $ 2,010 $ 2,160 $ 2,610 $ 2,830 $ 3,050 $
2,925 $ 3,225 $ 3,525
Adjusted Segment Profit + DD&A
(2): $ 2,745 $ 2,920 $ 3,095 $ 3,620 $ 3,865 $ 4,110 $ 4,030 $
4,355 $ 4,680
Capital Expenditures: Maintenance $ 305
$ 340 $ 375 $ 295 $ 325 $ 355 $ 300 $ 330 $ 360 Growth 3,140
3,390 3,640 1,900
2,125 2,350 1,750 1,950
2,150
Total Capital Expenditures $
3,445 $ 3,730 $
4,015 $ 2,195 $
2,450 $ 2,705 $
2,050 $ 2,280 $
2,510
(1) Commodity price assumptions that are used to develop the
above are included in our quarterly data book that is available at
www.williamslp.com.
(2) Distributable Cash Flow, Cash Distribution Coverage Ratio,
Adjusted Segment Profit and Adjusted Segment Profit + DD&A are
non-GAAP measures. Reconciliations to the most relevant measures
included in GAAP are attached to this news release.
(3) The cash distributions in guidance are on an accrual basis
and reflect an approximate annual growth rate in limited partner
distributions of 5 percent to 7 percent annually in 2014 and 2015,
and 3 percent to 6 percent in 2016.
* Guidance does not reflect the effects of the merger agreement
announced Oct. 26, 2014.
Third-Quarter 2014 Materials to be Posted Shortly, Q&A
Webcast Scheduled for Tomorrow
Williams Partners’ third-quarter 2014 financial results will be
posted shortly at www.williamslp.com. The information will include
the data book and analyst package.
Williams Partners, Access Midstream Partners and Williams plan
to jointly host a Q&A live webcast on Thursday, October 30, at
9:30 a.m. EDT. A limited number of phone lines will be available at
(888) 882-4672. International callers should dial (719) 325-4746. 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, www.williamslp.com and
www.accessmidstream.com.
Form 10-Q
The partnership plans to file its third-quarter 2014 Form 10-Q
with the Securities and Exchange Commission this week. Once filed,
the document will be available on both the SEC and Williams
Partners websites.
Definitions of Non-GAAP Financial Measures
This press release includes certain financial measures –
distributable cash flow, cash distribution coverage ratio, adjusted
segment profit and adjusted segment profit + DD&A – that are
non-GAAP financial measures as defined under the rules of the
SEC.
For Williams Partners L.P., adjusted segment profit 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. Adjusted
segment profit + DD&A is adjusted to add back depreciation and
amortization expense. Management believes these measures provide
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 plus depreciation and amortization and cash
distributions from our equity investments less our earnings from
our equity investments, distributions to noncontrolling interests
and maintenance capital expenditures. We also adjust for
reimbursements under omnibus agreements with Williams and certain
other items.
For Williams Partners L.P. we also calculate the ratio of
distributable cash flow to the total cash distributed (cash
distribution coverage ratio). This measure reflects the amount of
distributable cash flow relative to our cash distribution. We have
also provided this ratio calculated using the most directly
comparable GAAP measure, net income.
This 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 adjusted segment profit, adjusted
segment profit + DD&A 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, Williams Partners and Access Midstream
Partners
Williams, headquartered in Tulsa, Okla., is one of the leading
energy infrastructure companies in North America. It owns
controlling interests in both Williams Partners L.P. and Access
Midstream Partners, L.P. through its ownership of 100 percent of
the general partner of each partnership. Additionally, Williams
owns approximately 66 percent and 50 percent of the limited partner
units of Williams Partners L.P. and Access Midstream Partners,
L.P., respectively.
On June 15, 2014 Williams proposed the merger of Williams
Partners and Access Midstream Partners. The proposed merger has
been approved by boards of each partnership and is expected to
close in early 2015.
Williams Partners L.P. owns and operates both on-shore and
off-shore assets of approximately 15,000 miles of natural gas
gathering and transmission pipelines, 1,800 miles of NGL
transportation pipelines, an additional 11,000 miles of oil and gas
gathering pipelines and numerous other energy infrastructure
assets. The partnership's operated facilities have daily gas
gathering capacity of approximately 11 billion cubic feet,
processing capacity of approximately 7 billion cubic feet, NGL
production of more than 400,000 barrels per day and domestic
olefins production capacity of 1.95 billion pounds of ethylene and
114 million pounds of propylene per year.
Access Midstream Partners, L.P. owns and operates natural gas
midstream assets across nine states, with an average net throughput
of approximately 3.9 billion cubic feet per day and more than 6,495
miles of natural gas gathering pipelines. Headquartered in Oklahoma
City, the partnership's operations are focused on the Barnett,
Eagle Ford, Haynesville, Marcellus, Niobrara and Utica Shales and
the Mid-Continent region of the U.S.
For more information about Williams, Williams Partners and
Access Midstream Partners, visit www.williams.com,
www.williamslp.com and www.accessmidstream.com.
Forward-Looking Statements - Williams Partners L.P.
Certain matters contained in this document include
“forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. 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,” “proposed,” “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:
- The levels of cash distributions to
unitholders;
- The closing and expected timing of the
proposed merger of Access Midstream Partners, L.P. (ACMP) and us
(the Proposed Merger);
- The expected timing of the drop-down of
Williams’ remaining NGL & Petchem Services assets and
projects;
- Amounts and nature of future capital
expenditures;
- Expansion and growth of our business
and operations;
- Financial condition and liquidity;
- Business strategy;
- Cash flow from operations or results of
operations;
- Seasonality of certain business
components;
- Natural gas, natural gas liquids, and
olefins prices, supply and demand;
- Demand for our services
Forward-looking statements are based on numerous assumptions,
uncertainties, and risks that could cause future events or results
to be materially different from those stated or implied in this
document. Many of the factors that will determine these results are
beyond our ability to control or predict. Specific factors that
could cause actual results to differ from results contemplated by
the forward-looking statements include, among others, the
following:
- The satisfaction or waiver of the
conditions to closing in the merger agreement governing the
Proposed Merger;
- Whether we have sufficient cash from
operations to enable us to pay current and expected levels of cash
distributions, if any, following establishment of cash reserves and
payment of fees and expenses, including payments to our general
partner;
- Availability of supplies, market
demand, and volatility of commodity prices;
- Inflation, interest rates, fluctuation
in foreign exchange rates, and general economic conditions
(including future disruptions and volatility in the global credit
markets and the impact of these events on our customers and
suppliers);
- The strength and financial resources of
our competitors and the effects of competition;
- Whether we are able to successfully
identify, evaluate and execute investment opportunities;
- Our ability to acquire new businesses
and assets and successfully integrate those operations and assets
into our existing businesses, as well as successfully expand our
facilities;
- Development of alternative energy
sources;
- The impact of operational and
development hazards and unforeseen interruptions;
- Our ability to recover expected
insurance proceeds related to the Geismar plant;
- Costs of, changes in, or the results of
laws, government regulations (including safety and environmental
regulations), environmental liabilities, litigation and rate
proceedings;
- Our allocated costs for defined benefit
pension plans and other postretirement benefit plans sponsored by
our affiliates;
- Changes in maintenance and construction
costs;
- Changes in the current geopolitical
situation;
- Our exposure to the credit risks of our
customers and counterparties;
- Risks related to financing, including
restrictions stemming from our debt agreements, future changes in
our credit ratings, and the availability and cost of capital;
- The amount of cash distributions from
and capital requirements of our investments and joint ventures in
which we participate;
- Risks associated with weather and
natural phenomena, including climate conditions;
- Acts of terrorism, including
cybersecurity threats and related disruptions;
- Additional risks described in our
filings with the Securities and Exchange Commission.
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.
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 for
the year ended December 31, 2013, and Part II, Item 1A. Risk
Factors of this Form 10-Q.
Important Information:
In connection with the proposed merger of ACMP and WPZ, ACMP
will file with the SEC a Registration Statement on Form S-4 that
will include a consent statement of WPZ that will also constitute a
prospectus of ACMP. WPZ will mail the consent statement/prospectus
to the holders of WPZ units. Investors are urged to read the
consent statement/prospectus and other relevant documents filed
with the SEC regarding the proposed transaction when they become
available, because they will contain important information. The
consent statement/prospectus and other documents that will be filed
by ACMP and WPZ with the SEC will be available free of charge at
the SEC’s website, www.sec.gov, or by directing a request when such
a filing is made either to Access Midstream Partners L.P., 525
Central Park Drive, Oklahoma City, Oklahoma 73105, Attention:
Investor Relations, or to Williams Partners L.P., One Williams
Center, Tulsa, Oklahoma 74172, Attention: Investor Relations.
ACMP, WPZ and certain of their directors and executive officers
may be deemed to be “participants” (as defined in Schedule 14A
under the Exchange Act) in respect of the proposed
transaction. Information about ACMP’s directors and executive
officers is available in ACMP’s annual report on Form 10-K for the
fiscal year ended December 31, 2013, as amended, initially filed
with the SEC on February 21, 2014. Information about WPZ’s
directors and executive officers is available in WPZ’s annual
report on Form 10-K for the fiscal year ended December 31, 2013
filed with the SEC on February 26, 2014. Other information
regarding the participants and a description of their direct and
indirect interests, by security holdings or otherwise, will be
contained in the consent statement/prospectus and other relevant
materials to be filed with the SEC regarding the transaction.
Investors should read the consent statement/prospectus carefully
when it becomes available before making any voting or investment
decisions. You may obtain free copies of these documents from WPZ
or ACMP using the sources indicated above.
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
Reconciliation of GAAP “Segment Profit (Loss)” to
Non-GAAP “Adjusted Segment Profit (Loss)” and “Adjusted Segment
Profit (Loss) + DD&A” (UNAUDITED)
2013 2014
(Dollars in millions) 1st Qtr 2nd Qtr
3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr
3rd Qtr Year
Segment profit
(loss): Northeast G&P $ (9 ) $ 12 $ (1 ) $ (26 ) $ (24 ) $
6 $ 15 $ 35 $ 56 Atlantic-Gulf 159 152 137 166 614 165 168 162 495
West 186 162 207 186 741 165 152 175 492 NGL & Petchem Services
158 101 68
19 346 167
58 1 226
Total
segment profit (loss) $ 494
$ 427 $ 411
$ 345 $ 1,677
$ 503 $ 393 $
373 $ 1,269
Segment adjustments:
Northeast
G&P
Share of impairments at equity method investee $ — $ — $ — $ 7 $ 7
$ — $ — — $ — Contingency loss — — 9 16 25 — — — — Loss related to
compressor station fire — — — — — 6 — — 6 Net gain related to
partial acreage dedication release — — — — — — — (12 ) (12 )
Impairment of certain equipment held for sale —
— — —
— — 17
— 17 Total Northeast G&P
adjustments — — 9 23 32 6 17 (12 ) 11
Atlantic-Gulf
Litigation settlement gain (6 ) — — — (6 ) — — — — Net loss
(recovery) related to Eminence storage facility leak —
(5 ) 5 (2 )
(2 ) — — —
— Total Atlantic-Gulf adjustments (6 ) (5 ) 5
(2 ) (8 ) — — — —
West
Loss related to Opal incident — —
— —
— — 6 —
6 Total West adjustments — — — — — — 6 — 6
NGL & Petchem
Services
Loss related to Geismar Incident — 6 4 4 14 — — 5 5 Geismar
Incident adjustment for insurance and timing —
— (35 ) 118
83 54 96 —
150 Total NGL & Petchem Services
adjustments — 6 (31 ) 122 97 54 96 5 155
Total segment adjustments
$ (6 ) $ 1
$ (17 ) $ 143
$ 121 $ 60
$ 119 $ (7 )
$ 172 Adjusted segment profit
(loss): Northeast G&P $ (9 ) $ 12 $ 8 $ (3 ) $ 8 $ 12 $ 32
$ 23 $ 67 Atlantic-Gulf 153 147 142 164 606 165 168 162 495 West
186 162 207 186 741 165 158 175 498 NGL & Petchem Services
158 107 37
141 443 221
154 6 381
Total
adjusted segment profit (loss) $ 488
$ 428 $ 394
$ 488 $ 1,798
$ 563 $ 512
$ 366 $ 1,441
Depreciation and amortization (DD&A): Northeast
G&P $ 29 $ 32 $ 33 $ 38 $ 132 $ 39 $ 40 41 $ 120 Atlantic-Gulf
93 87 92 91 363 94 91 91 276 West 61 58 58 59 236 58 60 60 178 NGL
& Petchem Services 13 14
18 15 60
17 16 17
50
Total depreciation and amortization
$ 196 $ 191
$ 201 $ 203
$ 791 $ 208 $
207 $ 209 $
624 Adjusted segment profit (loss) +
DD&A: Northeast G&P $ 20 $ 44 $ 41 $ 35 $ 140 $ 51 $ 72
64 $ 187 Atlantic-Gulf 246 234 234 255 969 259 259 253 771 West 247
220 265 245 977 223 218 235 676 NGL & Petchem Services
171 121 55
156 503 238
170 23 431
Total
adjusted segment profit (loss) + DD&A $ 684
$ 619 $ 595
$ 691 $
2,589 $ 771 $ 719
$ 575 $ 2,065
Note: Segment profit
(loss) includes equity earnings (losses) and income (loss) from
investments reported in other income (expense) - net below
operating income in the Consolidated Statement of Comprehensive
Income. Equity earnings (losses) result from investments accounted
for under the equity method. Income (loss) from investments results
from the management of certain equity investments.
Williams Partners
L.P. 2014 Guidance 2015 Guidance 2016
Guidance (Dollars in millions, except coverage ratios)
Midpoint Midpoint Midpoint
Reconciliation of Non-GAAP
“Distributable Cash Flow” to GAAP “Net income” Net income $ 1,566 $
2,035 $ 2,290 Depreciation and amortization 910 1,035 1,130
Maintenance capital expenditures (340 ) (325 ) (330 ) Attributable
to noncontrolling interests (35 ) (105 ) (135 ) Geismar Incident
adjustment for insurance and timing (115 ) — — Other / Rounding (13
) 145 130 Distributable cash flow 1,973 2,785 3,085 Less:
Pre-partnership distributable cash flow 23 — — Distributable cash
flow attributable to partnership operations $ 1,950 $ 2,785 $ 3,085
Total cash to be distributed $ 2,370 $ 2,714 $ 2,950
Coverage ratios: Distributable cash flow attributable to
partnership operations divided by Total cash to be distributed 0.82
1.03 1.05 Net income divided by Total cash to be distributed
0.66 0.75 0.78 Reconciliation of Non-GAAP “Adjusted Segment
Profit” and “Adjusted Segment Profit + DD&A” to GAAP “Segment
Profit”
Segment profit: Northeast G&P $ 184 $ 491 $ —
Atlantic-Gulf 630 965 — West 614 595 — NGL & Petchem Services
1,010 915 — Unallocated Revisions (335 ) — — Total segment profit $
2,103 $ 2,966 $ 3,225
Adjustments:
Northeast G&P - loss related to
compressor station fire
$ 6 $ — $ — Northeast G&P - impairment of certain equipment
held for sale 17 — — Northeast G&P - net gain related to
partial acreage dedication release (12 ) — — Northeast G&P -
other — (136 ) — West - loss related to Opal incident 6 — — NGL
& Petchem Services - Geismar Incident adjustment for insurance
and timing (115 ) — — NGL & Petchem Services - loss related to
Geismar Incident 5 — — Total adjustments $ (93 ) $ (136 ) $ —
Adjusted segment profit: Northeast G&P $ 195 $ 355 $ —
Atlantic-Gulf 630 965 — West 620 595 — NGL & Petchem Services
900 915 — Unallocated Revisions (335 ) — — Total adjusted segment
profit $ 2,010 $ 2,830 $ 3,225
Depreciation and amortization
(DD&A): Northeast G&P $ 170 $ 210 $ — Atlantic-Gulf 430
495 — West 235 235 — NGL & Petchem Services 75 95 — Total
depreciation and amortization $ 910 $ 1,035 $ 1,130
Adjusted
segment profit + DD&A: Northeast G&P $ 365 $ 565 $ —
Atlantic-Gulf 1,060 1,460 — West 855 830 — NGL & Petchem
Services 975 1,010 — Unallocated Revisions (335 ) — — Total
adjusted segment profit + DD&A $ 2,920 $ 3,865 $ 4,355
2013
2014 (Dollars in millions, except coverage ratios) 1st Qtr
2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr
2nd Qtr 3rd Qtr Year
Williams
Partners L.P. Reconciliation of Non-GAAP “Distributable cash
flow” to GAAP “Net income” Net income $ 344 $ 272 $ 285 $
218 $ 1,119 $ 352 $ 234 $ 218 $ 804 Income attributable to
noncontrolling interests — — — (3 ) (3 ) — (2 ) (1 ) (3 )
Depreciation and amortization 196 191 201 203 791 208 207 209 624
Non-cash amortization of debt issuance costs included in interest
expense 3 4 4 3 14 4 3 4 11 Equity earnings from investments (18 )
(35 ) (31 ) (20 ) (104 ) (23 ) (32 ) (36 ) (91 ) Allocated
reorganization-related costs 2 — — — 2 — — — — Impairment of
certain equipment held for sale — — — — — — 17 — 17 Loss related to
Geismar Incident — 6 4 4 14 — — 5 5 Geismar Incident adjustment for
insurance and timing — — (35 ) 118 83 54 96 — 150 Contingency loss
— — 9 16 25 — — — — Reimbursements from Williams under omnibus
agreements 4 4 2 3 13 3 4 1 8 Loss related to Opal incident — — — —
— — 6 — 6 Plymouth incident adjustment — — — — — — 3 3 6 Canadian
income tax — — — — — — 4 8 12 Income related to partial acreage
dedication release — — — — — — — (12 ) (12 ) Maintenance capital
expenditures (44 ) (76 ) (79 )
(59 ) (258 ) (36 )
(90 ) (103 ) (229 )
Distributable cash flow excluding equity investments 487 366 360
483 1,696 562 450 296 1,308 Plus: Equity investments cash
distributions to Williams Partners L.P. 38
41 34 41
154 43 54
71 168
Distributable cash flow 525 407 394 524 1,850 605 504 367 1,476
Less: Pre-partnership distributable cash flow 28
20 16 15
79 23 —
— 23
Distributable cash flow attributable to partnership operations $
497 $ 387 $ 378 $ 509
$ 1,771 $ 582 $ 504
$ 367 $ 1,453 Total cash
distributed $ 473 $ 489 $ 442 $ 556 $ 1,960 $ 566 $ 577 $ 587 $
1,730
Coverage ratios: Distributable cash flow
attributable to partnership operations divided by Total cash
distributed 1.05 0.79
0.86 0.92 0.90
1.03 0.87
0.63 0.84 Net income divided by
Total cash distributed 0.73 0.56
0.64 0.39
0.57 0.62 0.41
0.37 0.46
Williams Partners L.P.Media Contact:Tom Droege,
918-573-4034orInvestor Contacts:John Porter,
918-573-0797orSharna Reingold, 918-573-2078
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