Market Overview

Williams Partners Reports Second Quarter 2018 Financial Results

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Williams Partners L.P. (NYSE:WPZ) today announced its financial results
for the three and six months ended June 30, 2018.

Second-Quarter 2018 Highlights

  • 2Q 2018 Net Income of $426 Million; Up $106 Million over 2Q 2017
  • 2Q 2018 Adjusted EBITDA of $1.097 Billion
  • 2Q 2018 DCF of $705 Million, Up $7 Million over 2Q 2017
  • Transco Transportation Revenues Up $50 Million in 2Q 2018; Up $114
    Million Year-to-Date or 16% - Driven by Big 5 Expansion Projects
    Placed In Service in 2017 as well as Mainline Service on Atlantic
    Sunrise in 2018
  • Current Business Segments Increased Adjusted EBITDA by $18 Million in
    2Q 2018 vs. 2Q 2017; Year-to-Date, Current Business Segments Up $71
    Million
  • Year-to-Date, Cash Distribution Coverage Ratio of 1.25x.
   
Summary Financial Information 2Q YTD
Amounts in millions, except per-unit amounts. Per unit amounts
are reported on a diluted basis. All amounts are attributable to
Williams Partners L.P.
2018   2017 2018   2017
   
GAAP Measures
Cash Flow from Operations $ 958 $ 913 $ 1,710 $ 1,765
Net income (loss) $ 426 $ 320 $ 786 $ 954
Net income (loss) per common unit $ 0.44 $ 0.33 $ 0.81 $ 1.00
 
Non-GAAP Measures (1)
Adjusted EBITDA $ 1,097 $ 1,104 $ 2,219 $ 2,221
DCF attributable to partnership operations $ 705 $ 698 $ 1,489 $ 1,450
Cash distribution coverage ratio 1.17 x 1.22 x 1.25 x 1.27 x
 
(1) Adjusted EBITDA, distributable cash flow (DCF) and cash
distribution coverage ratio are non-GAAP measures. Reconciliations
to the most relevant measures included in GAAP are attached to this
news release.
 

Second-Quarter 2018 Financial Results

Williams Partners reported unaudited second-quarter 2018 net income
attributable to controlling interests of $426 million, a $106 million
improvement from second-quarter 2017. The favorable change was driven
primarily by a $68 million increase in operating income due primarily to
an increase in service revenues and NGL margins partially offset by the
absence of $25 million of operating income earned in second-quarter 2017
by our former olefins operations. Other Investing Income for the quarter
was favorably impacted by a $62 million gain on the deconsolidation of
the partnership's interests in the Jackalope Gas Gathering System.
Partially offsetting the improvements was a $33 million decrease in
equity earnings primarily driven by lower earnings at Discovery Producer
Services.

Year-to-date, Williams Partners reported unaudited net income of $786
million, a $168 million decrease from the same period in 2017. The
unfavorable change was driven primarily by a $202 million decrease in
Other Investing Income due largely to the absence of a $269 million gain
in first-quarter 2017 associated with a transaction involving certain
joint-venture interests in the Permian Basin and Marcellus Shale,
partially offset by a $62 million gain on the partnership's interests in
the Jackalope Gas Gathering System. The unfavorable change also reflects
a $58 million decrease in equity earnings primarily driven by lower
earnings at Discovery Producer Services. Partially offsetting the
decrease was a $110 million improvement in operating income, due
primarily to an increase in service revenues and NGL margins overcoming
the absence of $57 million of operating income earned in the first half
of 2017 by our former olefins operations.

Williams Partners reported second-quarter 2018 Adjusted EBITDA of $1.097
billion, a $7 million decrease from second-quarter 2017. The change was
driven by a $37 million decrease in proportional EBITDA from joint
ventures due primarily to less production on the Discovery system, the
absence of $23 million Adjusted EBITDA earned in second-quarter 2017
from the NGL & Petchem Services segment primarily as a result of the
sale of the Geismar olefins facility, and $28 million increased
operating & maintenance (O&M) expenses at the partnership's continuing
businesses primarily due to increased reliability and integrity costs at
Transco. Partially offsetting these decreases was a $46 million increase
in service revenues, driven primarily by expansion projects brought
online by Transco in 2017 and 2018. Second-quarter 2018 service revenues
would have increased by $67 million over second-quarter 2017 if
revenue-recognition standards adopted in 2018 had been applied to
second-quarter 2017 results. Additionally, NGL and Marketing margins
improved by $35 million. Williams Partners' current business segments
increased Adjusted EBITDA by $18 million in second quarter 2018 vs.
second-quarter 2017.

Year-to-date, Williams Partners reported Adjusted EBITDA of $2.219
billion, a decrease of $2 million from the same six-month reporting
period in 2017. The modest change was driven by the absence of $72
million Adjusted EBITDA earned in 2017 from the NGL & Petchem Services
segment primarily as a result of the sale of the Geismar olefins
facility, a $60 million decrease in proportional EBITDA from joint
ventures due primarily to less production on the Discovery system, $42
million increased O&M expenses at the partnership's continuing
businesses primarily due to increased reliability and integrity costs at
Transco, and a $12 million regulatory charge per approved pipeline
transportation rates associated with the Tax Reform Act. Partially
offsetting these decreases was $125 million of increased service
revenues, driven primarily by expansion projects brought online by
Transco in 2017 and 2018. Service revenue would have increased by $165
million over first half of 2017 if revenue-recognition standards adopted
in 2018 had been applied to first-half 2017 results. Additionally, NGL
and Marketing margins improved by $49 million. Year-to-date, Williams
Partners' current business segments increased Adjusted EBITDA by $71
million vs. the same reporting period in 2017.

Distributable Cash Flow and Distributions

For second-quarter 2018, Williams Partners generated $705 million in
distributable cash flow (DCF) attributable to partnership operations,
compared with $698 million in DCF attributable to partnership operations
for second-quarter 2017. DCF was unfavorably impacted by the
partnership's change in Adjusted EBITDA and by a $52 million increase in
maintenance capital expenditures primarily due to accelerated
inspections and other key maintenance needs moved into this quarter to
take advantage of timing of outages associated with expansion
construction work. Beginning with first-quarter 2018 results, the
partnership has discontinued the adjustment which removed the DCF
associated with 2016 contract restructuring prepayments in the Barnett
Shale and Mid-Continent region. For second-quarter 2018, the cash
distribution coverage ratio was 1.17x.

Year-to-date, Williams Partners generated $1.489 billion in DCF, a $39
million increase over the same period in 2017. The adjustment described
in the previous paragraph involving the removal of DCF associated with
2016 contract restructuring prepayments in the Barnett Shale and
MId-Continent region positively impacted year-to-date DCF results. DCF
was unfavorably impacted by a $99 million increase in maintenance
capital expenditures primarily due to accelerated inspections and other
key maintenance needs moved into the first half of 2018 to take
advantage of timing of outages associated with expansion construction
work. The cash distribution coverage ratio for the first six-month
reporting period was 1.25x.

Williams Partners recently announced a regular quarterly cash
distribution of $0.629 per unit, payable Aug. 10, 2018, to its common
unitholders of record at the close of business on Aug. 3, 2018.

CEO Perspective

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

"Our consistent strategy of connecting growing natural gas demand to
growing low-cost gas production delivered results which slightly
exceeded our business plan for second quarter, and we look forward to an
even stronger second half of the year as the Atlantic Sunrise project
nears completion and producer activity on our systems in the Northeast
and Wyoming is ramping up. We are also excited about the transactions
announced earlier this week. Selling assets in a maturing basin at
attractive multiples, and redeploying that capital to higher growth
basins enhances our position to capitalize on future growth
opportunities and follows our strategy to connect the best supplies to
the best markets.

"It is clear that our focus on natural gas volume growth combined with
our advantaged infrastructure and the continued confidence in low-price
natural gas continues to drive demand for services on our systems.
Placing the Transco expansion projects into service in 2017 and 2018 is
now delivering exceptional fee-based revenue growth - a $50 million
increase for second-quarter 2018 over second-quarter 2017 for Transco
transportation revenues thanks to those expansion projects coming
online. Our growth was not limited to Transco as Williams Partners'
current business segments posted year-over-year increases in Adjusted
EBITDA for the quarter and year-to-date.

"I'm pleased our teams were able to complete so much maintenance work
this quarter, especially in our high-growth areas where we accelerated
inspections and other key maintenance needs into this quarter to take
advantage of the timing of outages associated with expansion
construction work and project work - particularly important in
association with a project like Atlantic Sunrise, which is preparing to
bring additional loads on to that system. I'm proud of our team's
exceptional focus on safety and environmental compliance throughout the
construction and commissioning process on this large and complex project.

"We are also making great progress on several other projects. In
Wyoming, we just announced an expansion on our Jackalope Gas Gathering
System and associated Bucking Horse gas processing facility in the
Powder River Basin, Niobrara Shale play that will increase processing
capacity to 345 million cubic feet per day ('MMcf/d') by the end of 2019
to meet growing customer demand in this underserved growth basin. We
also completed major modifications to our Mobile Bay processing plant to
enable the handling of large volumes of gas liquids from Shell's
Norphlet fields in the Eastern Gulf of Mexico. Additionally, a major
expansion of our Oak Grove gas-processing facility in West Virginia is
also underway. Construction is going well on Transco's Gulf Connector
project, and we realized great progress on the permitting of several
other Transco projects in the Northeast and Northwest Pipeline in
Seattle."

Business Segment Results

For second-quarter 2018 results, Williams Partners' operations are
comprised of the following reportable segments: Atlantic-Gulf, West, and
Northeast G&P. Following the sale of Williams Partners' ownership
interest in the Geismar olefins plant on July 6, 2017, the partnership's
NGL & Petchem Services segment no longer contained any operating assets.

       
Amounts in millions 2Q 2018 2Q 2017 YTD 2018 YTD 2017
Modified
EBITDA
  Adjust.   Adjusted
EBITDA
Modified
EBITDA
  Adjust.   Adjusted

EBITDA

Modified

EBITDA

  Adjust.   Adjusted

EBITDA

Modified

EBITDA

  Adjust.   Adjusted

EBITDA

Atlantic -Gulf $ 475   ($19 )   $ 456 $ 454   $ 8   $ 462 $ 926   ($4 )   $ 922 $ 904   $ 11   $ 915
West 389 389 356 16 372 802 (7 ) 795 741 20 761
Northeast G&P 255 255 247 1 248 505 505 473 2 475
NGL & Petchem Services 30 (7 ) 23 81 (9 ) 72
Other   (4 )   1       (3 )   (11 )     10       (1 )   (11 )   8       (3 )   9     (11 )     (2 )
Total $ 1,115     ($18 )   $ 1,097   $ 1,076     $ 28     $ 1,104   $ 2,222     ($3 )   $ 2,219   $ 2,208   $ 13     $ 2,221  
 
Williams Partners uses Modified EBITDA for its segment reporting.
Definitions of Modified EBITDA and Adjusted EBITDA and schedules
reconciling these measures to net income are included in this news
release.
 

Atlantic-Gulf

This segment includes the partnership's interstate natural gas pipeline,
Transco, and significant natural gas gathering and processing and crude
oil production handling and transportation assets in the Gulf Coast
region, including a 51 percent interest in Gulfstar One (a consolidated
entity), which is a proprietary floating production system, and various
petrochemical and feedstock pipelines in the Gulf Coast region, as well
as a 50 percent equity-method investment in Gulfstream, a 41 percent
interest in Constitution (a consolidated entity) which is developing a
pipeline project, and a 60 percent equity-method investment in Discovery.

The Atlantic-Gulf segment reported Modified EBITDA of $475 million for
second-quarter 2018, compared with $454 million for second-quarter 2017.
Adjusted EBITDA decreased by $6 million to $456 million for the same
time period. The improvement in Modified EBITDA reflects $43 million
increased service revenues driven primarily by Transco's 'Big 5'
expansion projects placed into service in 2017 as well as mainline
service on Atlantic Sunrise in 2018. The quarter was also favorably
impacted by a $20 million benefit associated with the Tax Reform Act.
Partially offsetting these increases were a $36 million decrease in
proportional EBITDA from joint ventures due primarily to a significant
decline in volumes on the deepwater Discovery system's Hadrian field and
a $16 million increase in O&M expenses mainly related to pipeline
integrity program costs. The adjustment associated with the Tax Reform
Act discussed in this paragraph is excluded from Adjusted EBITDA.

Year-to-date, the Atlantic-Gulf segment reported Modified EBITDA of $926
million, an increase of $22 million over the same six-month period in
2017. Adjusted EBITDA increased $7 million to $922 million. The
improvement in Modified EBITDA reflects $116 million increased service
revenues due primarily to Transco expansion projects led by the 'Big 5'
placed into service in 2017 as well as mainline service on Atlantic
Sunrise in 2018. Partially offsetting this increase was a $65 million
decrease in proportional EBITDA from joint ventures due primarily to a
significant decline in volumes on the deepwater Discovery system's
Hadrian field and a $39 million increase in O&M expenses mainly related
to pipeline integrity program costs.

West

This segment includes the partnership's interstate natural gas pipeline,
Northwest Pipeline, and natural gas gathering, processing, and treating
operations in New Mexico, Colorado, and Wyoming, as well as the Barnett
Shale region of north-central Texas, the Eagle Ford Shale region of
south Texas, the Haynesville Shale region of northwest Louisiana, and
the Mid-Continent region which includes the Anadarko, Arkoma, Delaware
and Permian basins. This reporting segment also includes an NGL and
natural gas marketing business, storage facilities, and an undivided 50
percent interest in an NGL fractionator near Conway, Kansas, a 50
percent equity-method investment in OPPL and a 50 percent interest in
Jackalope Gas Gathering Services, L.L.C. (Jackalope) (an equity-method
investment following deconsolidation as of June 30, 2018). The
partnership completed the sale of its 50 percent equity-method
investment in a Delaware Basin gas gathering system in the Mid-Continent
region during first-quarter 2017.

The West segment reported Modified EBITDA of $389 million for
second-quarter 2018, compared with $356 million for second-quarter 2017.
Adjusted EBITDA increased by $17 million to $389 million. The increase
in Adjusted EBITDA was driven primarily by a $37 million improvement in
NGL and marketing margins due to favorable prices. Partially offsetting
the increases was a $10 million unfavorable change in other income and
expense primarily driven by a $6 million regulatory charge per approved
pipeline transportation rates associated with the Tax Reform Act.
Additionally, service revenue declined by $7 million, primarily due to
lower rates at Northwest Pipeline per its 2017 rate settlement
agreement, while the favorable impact of higher volumes was offset by an
unfavorable change in recognition of deferred revenue driven by the
adoption of new accounting standards in 2018. Second-quarter 2018
service revenues would have increased by $14 million over second-quarter
2017 if the new revenue-recognition standards adopted in 2018 had been
applied to second-quarter 2017 results, which would have reduced
second-quarter 2017 results by $21 million. The variance in Adjusted
EBITDA between the periods was $16 million less favorable than the
variance in Modified EBITDA primarily due to the fact that Adjusted
EBITDA for both periods included estimated minimum volume commitments
(MVCs). While estimated MVCs were not recognized in Modified EBITDA
until the fourth quarter in 2017, with the adoption of new accounting
standards, estimated MVC revenue is recognized earlier in 2018 Modified
EBITDA.

Year-to-date, the West segment reported Modified EBITDA of $802 million,
an increase of $61 million over the same six-month period in 2017.
Adjusted EBITDA increased by $34 million to $795 million. The increase
in Adjusted EBITDA was driven primarily by $52 million increased NGL and
marketing margins. Partially offsetting this increase was a $12 million
regulatory charge per approved pipeline transportation rates associated
with the Tax Reform Act, and a $9 million decline in service revenue,
which includes the favorable impact of higher volumes offset by the
unfavorable change in recognition of deferred revenue driven by the
adoption of new accounting standards in 2018. First-half 2018 service
revenues would have increased by $31 million over first-half 2017
results if revenue-recognition standards adopted in 2018 had been
applied to first half 2017 results, which would have reduced first half
2017 results by $40 million. The variance in Adjusted EBITDA between the
periods was $27 million less favorable than the variance in Modified
EBITDA primarily due to the fact that Adjusted EBITDA for both periods
included estimated MVCs. While estimated MVCs were not recognized in
Modified EBITDA until the fourth quarter in 2017, with the adoption of
new accounting standards, estimated MVC revenue is recognized earlier in
2018 Modified EBITDA.

Northeast G&P

This segment includes the partnership's natural gas gathering and
processing, compression and NGL fractionation businesses in the
Marcellus Shale region primarily in Pennsylvania, New York, and West
Virginia and Utica Shale region of eastern Ohio, as well as a 66 percent
interest in Cardinal (a consolidated entity), a 62 percent equity-method
investment in UEOM, a 69 percent equity-method investment in Laurel
Mountain, a 58 percent equity-method investment in Caiman II, and
Appalachia Midstream Services, LLC, which owns an approximate average 66
percent equity-method investment in multiple gas gathering systems in
the Marcellus Shale.

The Northeast G&P segment reported Modified EBITDA of $255 million for
second-quarter 2018, compared with $247 million for second-quarter 2017.
Adjusted EBITDA increased by $7 million to $255 million. The improvement
in both measures was driven primarily by $15 million increased service
revenues due to higher volumes at the Susquehanna and Ohio River systems.

Year-to-date, the Northeast G&P segment reported Modified EBITDA of $505
million, an increase of $32 million over the same six-month period in
2017. Adjusted EBITDA increased by $30 million to $505 million. The
improvements in both measures was driven primarily by $26 million
increased service revenues due to higher volumes at the Susquehanna and
Ohio River systems, and a $9 million increase in proportional EBITDA of
joint ventures due largely to the partnership's increase in ownership in
two Marcellus Shale gathering systems in first-quarter 2017. Partially
offsetting these improvements was a $4 million increase in O&M expenses.

NGL & Petchem Services

In second-quarter 2017, this segment produced $30 million in Modified
EBITDA and $23 million in Adjusted EBITDA. For the first six-month
reporting period of 2017, this segment produced $81 million in Modified
EBITDA and $72 million in Adjusted EBITDA. As of July 7, 2017, this
segment no longer contained any operating assets following the sale of
the Geismar olefins facility on July 6, 2017.

Williams and Williams Partners Announce Meeting and Record Dates for
Williams Special Meeting

On July 12, 2018, Williams and Williams Partners announced that, in
connection with the previously announced merger transaction between
Williams and Williams Partners (the "Merger"), the registration
statement on Form S-4 (the "Registration Statement") has been declared
"effective" by the U.S. Securities and Exchange Commission ("SEC").
Following effectiveness of the Registration Statement, on July 13, 2018,
Williams Gas Pipeline Company, LLC, which owns units representing
approximately 73.8 percent of the outstanding units of Williams
Partners, delivered a written consent approving and adopting the Merger
Agreement and the Merger. As a result, no further action by any
unitholder of Williams Partners is required to adopt the Merger
Agreement and the Merger. The closing of the Merger remains subject to
customary closing conditions, including approval by the Williams
stockholders. On July 12, 2018, Williams announced that it has scheduled
a special meeting of Williams stockholders on Aug. 9, 2018, to vote on
the proposed Merger and related amendment of Williams Amended and
Restated Certificate of Incorporation to increase the number of shares
of Williams common stock.

Williams Companies Inc. Updates Guidance

Williams Partners unitholders interested in updates to financial
guidance, should refer to the second-quarter 2018 earnings news release
issued today by Williams Companies Inc. ("Williams") (NYSE:WMB).

Williams Partners' Second-Quarter 2018 Materials to be Posted
Shortly; Q&A Webcast Scheduled for Tomorrow

Williams Partners' second-quarter 2018 financial results package will be
posted shortly at www.williams.com.
The materials will include the analyst package.

Williams Partners and Williams will host a joint Q&A live webcast on
Thursday, Aug. 2, 2018, at 9:30 a.m. Eastern Time (8:30 a.m. Central
Time). A limited number of phone lines will be available at (877)
260-1479. International callers should dial (334) 323-0522. The
conference ID is 1766230. The link to the webcast, as well as replays of
the webcast, will be available for at least 90 days following the event
at www.williams.com.

Form 10-Q

The partnership plans to file its second-quarter 2018 Form 10-Q with the
Securities and Exchange Commission (SEC) this week. Once filed, the
document will be available on both the SEC and Williams Partners
websites.

Definitions of Non-GAAP Measures

This news release and accompanying materials 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 SEC.

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-method investments.

Adjusted EBITDA further excludes items of income or loss that we
characterize as unrepresentative of our ongoing operations. 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 net 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 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.

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 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. Williams Partners has
operations across the natural gas value chain including gathering,
processing and interstate transportation of natural gas and natural gas
liquids. 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 U.S. natural gas
infrastructure, owns approximately 74 percent of Williams Partners.

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

All statements, other than statements of historical facts, included
herein 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:

  • The closing and expected timing of, and anticipated financial
    results following, the merger of Williams' wholly owned subsidiary,
    SCMS LLC, with and into us (WPZ Merger);
  • Levels of cash distributions with respect to limited partner
    interests;
  • Our and our affiliates' future credit ratings;
  • Amounts and nature of future capital expenditures;
  • Expansion and growth of our business and operations;
  • Expected in-service dates for capital projects;
  • Financial condition and liquidity;
  • Business strategy;
  • Cash flow from operations or results of operations;
  • Seasonality of certain business components;
  • Natural gas and natural gas liquids 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 herein. 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:

  • Satisfaction of the conditions to the completion of the WPZ Merger,
    including receipt of the Williams stockholder approval, and our
    ability to close the WPZ Merger;
  • Whether we will produce sufficient cash flows to provide expected
    levels of cash distributions;
  • Whether we elect to pay expected levels of cash distributions;
  • Whether we will be able to effectively execute our financing plan;
  • Availability of supplies, market demand, and volatility of prices;
  • Inflation, interest rates, and general economic conditions
    (including future disruptions and volatility in the global credit
    markets and the impact of these events on customers and suppliers);
  • The strength and financial resources of our competitors and the
    effects of competition;
  • Whether we are able to successfully identify, evaluate, and timely
    execute investment opportunities;
  • Our ability to successfully expand our facilities and operations;
  • Development and rate of adoption of alternative energy sources;
  • The impact of operational and developmental hazards and unforeseen
    interruptions;
  • The impact of existing and future laws (including, but not limited
    to, the Tax Cuts and Jobs Act of 2017), regulations, the regulatory
    environment, environmental liabilities, and litigation, as well as our
    ability to obtain necessary permits and approvals, and achieve
    favorable rate proceeding outcomes;
  • Our costs for defined benefit pension plans and other
    postretirement benefit plans sponsored by our affiliates;
  • Changes in maintenance and construction costs;
  • Changes in the current geopolitical situation;
  • Our exposure to the credit risk of our customers and counterparties;
  • Risks related to financing, including restrictions stemming from
    debt agreements, future changes in credit ratings as determined by
    nationally-recognized credit rating agencies and the availability and
    cost of capital;
  • The amount of cash distributions from and capital requirements of
    our investments and joint ventures in which we participate;
  • Risks associated with weather and natural phenomena, including
    climate conditions and physical damage to our facilities;
  • Acts of terrorism, including cybersecurity threats, and related
    disruptions;
  • Additional risks described in our filings with the Securities and
    Exchange Commission (SEC).

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

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

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

Because forward-looking statements involve risks and uncertainties,
we caution that there are important factors, in addition to those listed
above, that may cause actual results to differ materially from those
contained in the forward-looking statements. For a detailed discussion
of those factors, see Part I, Item 1A. Risk Factors in our Annual Report
on Form 10-K filed with the SEC on February 22,
2018 and in Part
II, Item 1A. Risk Factors in our Quarterly Reports on Form 10-Q.

 
Williams Partners L.P.
Reconciliation of Non-GAAP Measures
(UNAUDITED)
  2017     2018  
(Dollars in millions, except coverage ratios)   1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year   1st Qtr   2nd Qtr   Year
                                 
Williams Partners L.P.            
Reconciliation of "Net Income (Loss)" to "Modified EBITDA",
Non-GAAP "Adjusted EBITDA" and "Distributable cash flow"
 
Net income (loss) $ 660 $ 348 $   284 $   (317 ) $   975 $   384 $   449 $   833
Provision (benefit) for income taxes 3 1 (1 ) 3 6
Interest expense 214 205 202 201 822 209 211 420
Equity (earnings) losses (107 ) (125 ) (115 ) (87 ) (434 ) (82 ) (92 ) (174 )
Other investing (income) loss - net (271 ) (2 ) (4 ) (4 ) (281 ) (4 ) (67 ) (71 )
Proportional Modified EBITDA of equity-method investments 194 215 202 184 795 169 178 347
Depreciation and amortization expenses 433 423 424 420 1,700 423 426 849
Accretion expense associated with asset retirement obligations for
nonregulated operations
  6       11     8     8     33   8     10     18  
Modified EBITDA 1,132 1,076 1,000 408 3,616 1,107 1,115 2,222
Adjustments
Estimated minimum volume commitments 15 15 18 (48 )
Severance and related costs 9 4 5 4 22
Settlement charge from pension early payout program 35 35
Regulatory adjustments resulting from Tax Reform 713 713 4 (20 ) (16 )
Share of regulatory charges resulting from Tax Reform for
equity-method investments
11 11 2 2
ACMP Merger and transition costs 4 3 4 11
Constitution Pipeline project development costs 2 6 4 4 16 2 1 3
Share of impairment at equity-method investment 1 1
Geismar Incident adjustment (9 ) 2 8 (1 )
Gain on sale of Geismar Interest (1,095 ) (1,095 )
Impairment of certain assets 1,142 9 1,151
Ad valorem obligation timing adjustment 7 7
Organizational realignment-related costs 4 6 6 2 18
(Gain) loss related to Canada disposition (3 ) (1 ) 4 4 4
(Gain) loss on asset retirement (5 ) 5
Gains from contract settlements and terminations (13 ) (2 ) (15 )
Accrual for loss contingency 9 9
(Gain) loss on early retirement of debt (30 ) 3 (27 ) 7 7
Gain on sale of RGP Splitter (12 ) (12 )
Expenses associated with Financial Repositioning 2 2
Expenses associated with strategic asset monetizations 1 4 5
WPZ Merger costs                           1     1  
Total EBITDA adjustments   (15 )     28     101     742     856   15     (18 )   (3 )
Adjusted EBITDA 1,117 1,104 1,101 1,150 4,472 1,122 1,097 2,219
 
Maintenance capital expenditures (1) (53 ) (100 ) (136 ) (154 ) (443 ) (100 ) (152 ) (252 )
Interest expense - net (2) (224 ) (216 ) (207 ) (208 ) (855 ) (212 ) (215 ) (427 )
Cash taxes (5 ) (1 ) (4 ) (2 ) (12 ) (1 ) (1 ) (2 )
Income attributable to noncontrolling interests (3) (27 ) (32 ) (27 ) (27 ) (113 ) (25 ) (24 ) (49 )
WPZ restricted stock unit non-cash compensation 2 1 1 1 5
Amortization of deferred revenue associated with certain 2016
contract restructurings (4)
  (58 )     (58 )   (59 )   (58 )   (233 )          
Distributable cash flow attributable to Partnership Operations   752       698     669     702     2,821   784     705     1,489  
 
Total cash distributed (5) $ 567 $ 574 $ 574 $ 574 $ 2,289 $ 588 $ 603 $ 1,191
 
Coverage ratios:
Distributable cash flow attributable to partnership operations
divided by Total cash distributed
  1.33       1.22     1.17     1.22     1.23   1.33     1.17     1.25  
Net income (loss) divided by Total cash distributed   1.16       0.61     0.49     (0.55 )   0.43   0.65     0.74     0.70  
 
(1) Includes proportionate share of maintenance capital expenditures
of equity investments.
(2) Includes proportionate share of interest expense of equity
investments.
(3) Excludes allocable share of certain EBITDA adjustments.
(4) Beginning first quarter 2018, as a result of the extended
deferred revenue amortization period under the new GAAP revenue
standard, we have discontinued the adjustment associated with these
2016 contract restructuring payments. The adjustments would have
been $32 million and $31 million for the first and second quarters
of 2018, respectively.
(5) Cash distributions for the first quarter of 2017 have been
decreased by $6 million to reflect the amount paid by WMB to WPZ
pursuant to the January 2017 Common Unit Purchase Agreement.
 
Williams Partners L.P.
Reconciliation of "Modified EBITDA" to Non-GAAP "Adjusted EBITDA"
(UNAUDITED)
  2017     2018
(Dollars in millions)   1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year   1st Qtr   2nd Qtr   Year
                                 
Modified EBITDA:            
Northeast G&P $ 226 $ 247 $ 115 $ 231 $ 819 $ 250 $ 255 $ 505
Atlantic-Gulf 450 454 430 (96 ) 1,238 451 475 926
West 385 356 (615 ) 286 412 413 389 802
NGL & Petchem Services 51 30 1,084 (4 ) 1,161
Other   20       (11 )     (14 )     (9 )     (14 )   (7 )     (4 )     (11 )
Total Modified EBITDA $ 1,132     $ 1,076     $ 1,000     $ 408     $ 3,616   $ 1,107     $ 1,115     $ 2,222  
 
Adjustments:

Northeast G&P

Share of impairment at equity-method investments $ $ $ 1 $ $ 1 $ $ $
Impairment of certain assets 121 121
Ad valorem obligation timing adjustment 7 7
Settlement charge from pension early payout program 7 7
Organizational realignment-related costs   1       1       2             4                  

Total Northeast G&P adjustments

1 1 131 7 140
Atlantic-Gulf
Constitution Pipeline project development costs 2 6 4 4 16 2 1 3
Settlement charge from pension early payout program 15 15
Regulatory adjustments resulting from Tax Reform 493 493 11 (20 ) (9 )
Share of regulatory charges resulting from Tax Reform for
equity-method investments
11 11 2 2
Organizational realignment-related costs 1 2 2 1 6
(Gain) loss on asset retirement               (5 )     5                        
Total Atlantic-Gulf adjustments 3 8 1 529 541 15 (19 ) (4 )

West

Estimated minimum volume commitments 15 15 18 (48 )
Impairment of certain assets 1,021 9 1,030
Settlement charge from pension early payout program 13 13
Regulatory adjustments resulting from Tax Reform 220 220 (7 ) (7 )
Organizational realignment-related costs 2 3 2 1 8
Gains from contract settlements and terminations   (13 )     (2 )                 (15 )                
Total West adjustments 4 16 1,041 195 1,256 (7 ) (7 )

NGL & Petchem Services

(Gain) loss related to Canada disposition (3 ) (1 ) 4 4 4
Expenses associated with strategic asset monetizations 1 4 5
Geismar Incident adjustments (9 ) 2 8 (1 )
Gain on sale of Geismar Interest (1,095 ) (1,095 )
Gain on sale of RGP Splitter (12 ) (12 )
Accrual for loss contingency   9                         9                  
Total NGL & Petchem Services adjustments (2 ) (7 ) (1,083 ) 3 (1,089 )

Other

Severance and related costs 9 4 5 4 22
ACMP Merger and transition costs 4 3 4 11
Expenses associated with Financial Repositioning 2 2
(Gain) loss on early retirement of debt (30 ) 3 (27 ) 7 7
WPZ Merger costs                                     1       1  
Total Other adjustments (21 ) 10 11 8 8 7 1 8
                           
Total Adjustments $ (15 )   $ 28     $ 101     $ 742     $ 856   $ 15     $ (18 )   $ (3 )
 
Adjusted EBITDA:
Northeast G&P $ 227 $ 248 $ 246 $ 238 $ 959 $ 250 $ 255 $ 505
Atlantic-Gulf 453 462 431 433 1,779 466 456 922
West 389 372 426 481 1,668 406 389 795
NGL & Petchem Services 49 23 1 (1 ) 72
Other   (1 )     (1 )     (3 )     (1 )     (6 )         (3 )     (3 )
Total Adjusted EBITDA $ 1,117     $ 1,104     $ 1,101     $ 1,150     $ 4,472   $ 1,122     $ 1,097     $ 2,219  

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