Williams Partners Reports First Quarter 2015 Financial Results

Williams Partners L.P. (WPZ) today announced unaudited financial results for first quarter 2015, during which time Williams Partners and Access Midstream Partners, L.P. (formerly NYSE: ACMP) merged to form one master limited partnership (MLP). Financial information for periods prior to July 2014 – when Williams (WMB) acquired control of Access Midstream – represents pre-merger Williams Partners and excludes Access Midstream.

Summary Financial Information 1Q
Amounts in millions, except coverage ratio amounts. All income amounts attributable to Williams Partners L.P. 2015 2014
(Unaudited)
Williams Partners
Adjusted EBITDA (1) $917 $768
DCF attributable to partnership operations (1) $646 $582
Cash distribution coverage ratio (1) .89x 1.03x
Net income $89 $352

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

Williams Partners reported first quarter 2015 adjusted EBITDA of $917 million, a $149 million, or 19 percent, increase from first quarter 2014.

The increase in adjusted EBITDA for first quarter 2015 is due primarily to the contribution of approximately $314 million of adjusted EBITDA from Access Midstream as a result of the merger, $69 million higher adjusted EBITDA for the Atlantic-Gulf, and $46 million higher adjusted EBITDA from Northeast G&P. Partially offsetting these increases were a $229 million decrease at NGL & Petchem Services due primarily to $173 million of business interruption proceeds included in adjusted EBITDA in 2014 and a $50 million decrease in the West due to lower NGL margins.

The increase in adjusted EBITDA in first quarter 2015 was also driven by $490 million, or 66 percent, higher fee-based revenues compared with first quarter 2014. The merger with Access Midstream contributed $369 million and Atlantic-Gulf and Northeast G&P improved $79 million and $43 million, respectively. Excluding the Access Midstream merger, Williams Partners first-quarter 2015 fee-based revenue was up $121 million, or 16 percent. Additionally, the proportional EBITDA from non-consolidated joint ventures increased $90 million for first quarter 2015 versus first quarter 2014, primarily from the addition of Access Midstream’s joint ventures.

Partially offsetting the increases described above, were lower results from Williams Partners’ Geismar plant. The Geismar plant was off-line for first quarter 2014; however, this period included $173 million of business interruption insurance proceeds included in adjusted EBITDA in 2014. Additionally, first quarter 2015 included $162 million higher operating and general and administrative expenses versus first quarter 2014 primarily as a result of the Access Midstream merger. Commodity margins totaled $56 million, down $105 million due primarily to low NGL prices.

Williams Partners reported unaudited first quarter 2015 net income of $89 million compared with $352 million in first quarter 2014. The decrease is primarily due to the absence of $125 million of Geismar business interruption insurance proceeds received in first quarter 2014 and a sharp decline in NGL margins, partially offset by new fee-based revenues from Gulfstar One and Transco expansion projects.

Distributable Cash Flow & Distributions

For first quarter 2015, Williams Partners generated $646 million in distributable cash flow (DCF) attributable to partnership operations, compared with $582 million in DCF attributable to partnership operations in first quarter 2014.

The $64 million increase in DCF for the quarter was driven by the $149 million net increase in adjusted EBITDA, partially offset by higher interest expense and maintenance capital expenditures primarily from the Access Midstream merger.

Williams Partners recently announced a regular quarterly cash distribution of $0.85 per unit for its common unitholders. The cash distribution is consistent with the partnership’s annual 2015 distribution guidance of $3.40 per unit announced on Feb. 18.

CEO Perspective

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

“First quarter 2015 results showed strong fee-based revenue growth from the Atlantic-Gulf and Northeast G&P operating areas as well as from the merger with Access. We expect the second quarter to be even higher with Gulfstar One and Keathley Canyon Connector nearing full production and additional projects being placed in service such as the Rockaway Lateral and the mainline portion of Leidy Southeast.

“We’ve reaffirmed 2015-2017 guidance for Williams Partners, but we do expect 2015 adjusted EBITDA and DCF to be near the low end of the range due to the extended Geismar ramp-up and the effects of low commodity prices on producers’ volumes and ethylene margins. Our outlook for 2016 and 2017 remains unchanged and we are excited about the rapid growth in DCF and coverage for the balance of the year.

“Our strategy remains sound and our backlog of projects to serve the demand side of the growing natural gas market continues to build.”

Business Segment Performance

Williams Partners Adjusted EBITDA
Amounts in millions 1Q 2015 1Q 2014
Access Midstream (1) $314 N/A
Atlantic-Gulf 335 266
NGL & Petchem Services (2) 7 236
Northeast G&P 100 54
West 162 212
Other -1
Total $917 $768

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

(1) First quarter 2014 represents pre-merger Williams Partners and excludes Access Midstream.

(2) First quarter 2014 includes $173 million in assumed business interruption insurance proceeds related to the 2013 incident at the Geismar plant.

Access Midstream

Access Midstream provides gathering, treating, and compression services to producers under long term, fee-based contracts in Pennsylvania, West Virginia, Ohio, Louisiana, Texas, Arkansas, Oklahoma, and Kansas. Access Midstream also includes a non-operated 50 percent interest in the Delaware Basin gas gathering system in the Mid-Continent region and a 49 percent interest in UEOM, a joint project to develop infrastructure for the gathering, processing and fractionation of natural gas and NGLs in the Utica Shale play in Eastern Ohio. Additionally, Access Midstream operates 100 percent of and owns an approximate average 45 percent interest in 11 natural gas gathering systems in the Marcellus Shale region.

Access Midstream reported adjusted EBITDA of $314 million for first quarter 2015. Williams Partners’ results for first quarter of 2014 are on a pre-merger basis and exclude Access Midstream. For first quarter 2014, Access Midstream reported $250 million of adjusted EBITDA. The increase in adjusted EBITDA between years was driven by higher fee-based volumes in the Utica, Eagle Ford and Haynesville areas.

Atlantic-Gulf

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

Atlantic-Gulf reported adjusted EBITDA of $335 million for first quarter 2015, compared with $266 million for first quarter 2014.

Adjusted EBITDA for the quarter increased primarily due to $79 million higher fee-based revenues from both Gulfstar One and higher transportation fee-based revenues on Transco associated with expansion projects, partially offset by lower NGL margins.

NGL & Petchem Services

NGL & Petchem Services includes an 88.5 percent interest in an olefins production facility in Geismar, La., along with a refinery grade propylene splitter and pipelines in the Gulf Coast region. This segment also includes midstream operations in Alberta Canada, including an oil sands offgas processing plant near Fort McMurray, 260 miles of NGL and olefins pipelines and an NGL/olefins fractionation facility and 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 adjusted EBITDA of $7 million for first quarter 2015, compared with $236 million for first quarter 2014.

The decrease in first-quarter 2015 adjusted EBITDA was primarily due to lower Geismar results. The prior year period Geismar results included $173 million of business interruption insurance proceeds included in adjusted EBITDA in 2014. For first quarter of 2015, the Geismar plant was off-line for most of the quarter and resumed consistent operations in late March. Additionally, adjusted EBITDA included $54 million lower commodity-related margins primarily at the Canadian operations and higher operating expenses related to the Geismar plant ramp-up.

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 58.4-percent equity investment in Caiman Energy II. Caiman Energy II owns a 50 percent interest in Blue Racer Midstream. 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 EBITDA of $100 million for first quarter 2015, compared with adjusted EBITDA of $54 million for first quarter 2014.

The improved results are primarily due to a $43 million increase in fee-based revenues driven by 32 percent higher volumes primarily at Susquehanna Supply Hub and higher results from our investments in Blue Racer and Laurel Mountain Midstream. Additionally, Ohio Valley Midstream realized $7 million higher adjusted EBITDA driven by higher fee-based volumes and incremental new services.

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 adjusted EBITDA of $162 million for first quarter 2015, compared with $212 million for first quarter 2014.

Lower adjusted EBITDA for the quarter was due primarily to $40 million lower NGL margins from low NGL prices.

Guidance

Williams Partners is reaffirming its guidance for the years 2015 through 2017 provided on Feb. 18, 2015. We expect 2015 adjusted EBITDA and distributable cash flow to be near the low end of the range due to the extended Geismar ramp-up and the effects of low commodity prices on volumes and margins.

Williams Partners’ current guidance for its earnings and capital expenditures are displayed in the following table:

Williams Partners financial outlook and commodity price assumptions
2015 2016 2017
(amounts in millions) Low Mid High Low Mid High Low Mid High
Adjusted EBITDA $ 4,300 $ 4,465 $ 4,630 $ 5,120 $ 5,315 $ 5,510 $ 5,750 $ 5,965 $ 6,180
Distributable Cash Flow (1) $ 2,845 $ 3,010 $ 3,175 $ 3,475 $ 3,675 $ 3,875 $ 3,960 $ 4,185 $ 4,410
Total Cash Distributions $ 3,010 $ 3,005 $ 2,995 $ 3,380 $ 3,440 $ 3,515 $ 3,770 $ 3,925 $ 4,090
Cash Distributions per LP Unit $ 3.40 $ 3.40 $ 3.40 $ 3.64 $ 3.71 $ 3.78 $ 3.89 $ 4.04 $ 4.19
Cash Distribution Coverage Ratio (1) .95x 1.00x 1.06x 1.03x 1.07x 1.10x 1.05x 1.07x 1.08x
Capital & Investment Expenditures
Growth $ 3,250 $ 3,525 $ 3,800 $ 2,650 $ 2,925 $ 3,200 $ 2,550 $ 2,850 $ 3,150
Maintenance $ 430 $ 430 $ 430 $ 430 $ 430 $ 430 $ 430 $ 430 $ 430
Total Capital & Investment Expenditures $ 3,680 $ 3,955 $ 4,230 $ 3,080 $ 3,355 $ 3,630 $ 2,980 $ 3,280 $ 3,580
Commodity Price Assumptions
Crude Oil – WTI ($ per barrel) $ 45.00 $ 55.00 $ 65.00 $ 53.75 $ 65.00 $ 76.25 $ 57.50 $ 70.00 $ 82.50
Natural Gas – Henry Hub ($/MMBtu) $ 2.50 $ 3.00 $ 3.50 $ 2.75 $ 3.25 $ 3.75 $ 3.25 $ 3.75 $ 4.25
Composite NGL Barrel ($ per gallon) $ 0.360 $ 0.450 $ 0.520 $ 0.410 $ 0.490 $ 0.560 $ 0.460 $ 0.550 $ 0.620
Crack Spread ($ per pound) (2) $ 0.297 $ 0.350 $ 0.411 $ 0.323 $ 0.376 $ 0.443 $ 0.346 $ 0.395 $ 0.466
Ethylene spot – ($ per pound) $ 0.360 $ 0.430 $ 0.500 $ 0.395 $ 0.465 $ 0.540 $ 0.430 $ 0.500 $ 0.580

Ethane – ($ per gallon)

$ 0.150 $ 0.190 $ 0.210 $ 0.170 $ 0.210 $ 0.230 $ 0.200 $ 0.250 $ 0.270
Propane ($ per gallon) $ 0.500 $ 0.600 $ 0.700 $ 0.550 $ 0.650 $ 0.750 $ 0.600 $ 0.700 $ 0.800
Propylene Spot ($ per pound) $ 0.405 $ 0.475 $ 0.545 $ 0.415 $ 0.485 $ 0.555 $ 0.430 $ 0.500 $ 0.570

(1) Distributable cash flow and cash distribution coverage ratio are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release.

(2) Crack spread is based on delivered U.S. Gulf Coast ethylene and Mont Belvieu ethane.

Williams, Williams Partners Analyst Day Set for May 13

Williams and Williams Partners are scheduled to host their annual Analyst Day event May 13. During the event, Williams’ management will give in-depth presentations covering all of Williams’ and Williams Partners L.P.’s energy infrastructure businesses. The event is scheduled from 8:30 a.m. to approximately 2:30 p.m. EDT.

On the day of the event, www.williams.com will feature presentation files for download along with a link to a live webcast. A replay of the Analyst Day webcast will be available for two weeks following the event.

First Quarter Materials to be Posted Shortly, Live Webcast Scheduled for Tomorrow

Williams Partners’ first quarter 2015 financial results will be posted shortly at www.williams.com. The information will include the data book and analyst package.

Williams and Williams Partners L.P. will jointly host a conference call and live webcast on Thursday, April 30, at 9:30 a.m. EDT. A limited number of phone lines will be available at (800) 475-3716. International callers should dial (719) 457-2660. A link to the live webcast, as well as replays of the webcast in both streaming and downloadable podcast formats, will be available for two weeks following the event at www.williams.com.

Form 10-Q

The company plans to file its first quarter 2015 Form 10-Q with the Securities and Exchange Commission this week. Once filed, the document will be available on both the SEC and Williams websites.

Definitions of Non-GAAP Financial Measures

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

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

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

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

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

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

Forward-Looking Statements

The reports, filings, and other public announcements of The Williams Companies, Inc. (Williams) and 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, and Section 21E of the Securities Exchange Act of 1934, as amended. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. You typically can identify forward-looking statements by various forms of words such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “assumes,” “guidance,” “outlook,” “in service date” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:

  • Expected levels of cash distributions by WPZ with respect to general partner interests, incentive distribution rights, and limited partner interests;
  • The levels of dividends to Williams stockholders;
  • Future credit ratings of Williams and WPZ;
  • 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; and
  • 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 presentation. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:

  • Whether WPZ will produce sufficient cash flows to provide the level of cash distributions we expect;
  • Whether Williams is able to pay current and expected levels of dividends;
  • Availability of supplies, market demand, and volatility of prices;
  • Inflation, interest rates, and fluctuation in foreign exchange rates and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on customers and suppliers);
  • The strength and financial resources of our competitors and the effects of competition;
  • Whether we are able to successfully identify, evaluate and 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 developmental hazards and unforeseen interruptions;
  • Costs of, changes in, or the results of laws, government regulations (including safety and environmental regulations), environmental liabilities, litigation, and rate proceedings;
  • Williams’ costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;
  • WPZ’s allocated costs for defined benefit pension plans and other postretirement benefit plans sponsored by its 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;
  • Acts of terrorism, including cybersecurity threats and related disruptions; and
  • 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 in this presentation. 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.

Investors are urged to closely consider the disclosures and risk factors in Williams’ and WPZ’s annual reports on Form 10-K filed with the SEC on Feb. 25, 2015, and each of our quarterly reports on Form 10-Q available from our offices or from our website at www.williams.com.

Williams Partners L.P.
Reconciliation of Non-GAAP Measures
(UNAUDITED)(UNAUDITED)
2014* 2015
(Dollars in millions, except coverage ratios) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr
Williams Partners L.P.

Reconciliation of GAAP “Net Income” to Non-GAAP “Modified EBITDA”, “Adjusted EBITDA”, and “Distributable cash flow”

Net income $ 352 $ 223 $ 247 $ 462 $ 1,284 $ 112
Provision (benefit) for income taxes 8 5 10 6 29 3
Interest expense 106 126 154 176 562 192
Equity (earnings) losses (23 ) (32 ) (85 ) (88 ) (228 ) (51 )
Other investing (income) loss (1 ) (1 ) (2 ) (1 )
Proportional Modified EBITDA of equity-method investments 54 62 150 165 431 136
Depreciation and amortization expenses 208 207 364 372 1,151 419
Accretion for asset retirement obligations associated with nonregulated operations 3 6 3 5 17 7
Modified EBITDA 708 596 843 1,097 3,244 817
Adjustments
Estimated minimum volume commitments 47 (114 ) (67 ) 55
Acquisition-related expenses 2 13 1 16
Merger and transition related expenses 11 30 41 32
Share of impairment at equity-method investment 8
Geismar Incident adjustment for insurance and timing 54 96 (71 ) 79
Loss related to Geismar Incident 5 5 10 1
Impairment of certain materials and equipment 17 35 52 3
Contingency loss (gain), net of legal costs (143 ) (143 )
Net gain related to partial acreage dedication release (12 ) (12 )
Loss related to compressor station fire 6 6
Loss related to Opal incident 6 2 8 1
Loss on sale of equipment 7 7
Total EBITDA adjustments 60 121 64 (248 ) (3 ) 100
Adjusted EBITDA $ 768 $ 717 $ 907 $ 849 $ 3,241 $ 917
Maintenance capital expenditures (1) (54 )
Interest expense (cash portion) (2) (204 )
Cash taxes (1 )
Income attributable to noncontrolling interests (23 )
WPZ restricted stock unit non-cash compensation 7
Plymouth incident adjustment 4
Distributable cash flow attributable to Partnership Operations 646
Total cash distributed $ 725
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash distributed 0.89
Net income divided by Total cash distributed 0.15
*Recast due to the merger between Williams Partners L.P. and Access Midstream Partners, L.P. and the change to Modified EBITDA as our measure of segment performance in first quarter 2015.
Notes:

(1) Includes proportionate share of maintenance capital expenditures of equity investments.

(2) Includes proportionate share of interest expense of equity investments.

Williams Partners L.P.
Reconciliation of Non-GAAP “Modified EBITDA” to Non-GAAP “Adjusted EBITDA”
(UNAUDITED)
2014* 2015
(Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr
Modified EBITDA:
Access Midstream $ $ (2 ) $ 254 $ 390 $ 642 $ 228
Northeast G&P 48 59 80 208 395 90
Atlantic-Gulf 266 270 271 258 1,065 335
West 212 199 224 188 823 161
NGL & Petchem Services 182 72 17 53 324 6
Other (2 ) (3 ) (5 ) (3 )
Total Modified EBITDA $ 708 $ 596 $ 843 $ 1,097 $ 3,244 $ 817
Adjustments:

Access Midstream

Acquisition-related expenses $ $ 2 $ 13 $ 1 $ 16 $
Merger and transition costs 8 29 37 30
Loss on sale of equipment 7 7
Impairment of certain materials and equipment 12 12 1
Estimated minimum volume commitments 47 (114 ) (67 ) 55
Total Access Midstream adjustments 2 68 (65 ) 5 86

Northeast G&P

Share of impairment at equity-method investment 8
Contingency (gain) loss, net of legal costs (143 ) (143 )
Loss related to compressor station fire 6 6
Net gain related to partial acreage dedication release (12 ) (12 )
Impairment of certain materials and equipment 17 13 30 2
Total Northeast G&P adjustments 6 17 (12 ) (130 ) (119 ) 10

Atlantic-Gulf

Impairment of certain equipment 10 10
Total Atlantic-Gulf adjustments 10 10

West

Loss related to Opal incident 6 2 8 1
Total West adjustments 6 2 8 1

NGL & Petchem Services

Loss related to Geismar Incident 5 5 10 1
Geismar Incident adjustment for insurance and timing 54 96 (71 ) 79
Total NGL & Petchem Services adjustments 54 96 5 (66 ) 89 1

Other

WPZ conflicts committee costs associated with merger 3 1 4 2
Total Other adjustments 3 1 4 2
Total Adjustments $ 60 $ 121 $ 64 $ (248 ) $ (3 ) $ 100
Adjusted EBITDA:
Access Midstream $ $ $ 322 $ 325 $ 647 $ 314
Northeast G&P 54 76 68 78 276 100
Atlantic-Gulf 266 270 271 268 1,075 335
West 212 205 224 190 831 162
NGL & Petchem Services 236 168 22 (13 ) 413 7
Other (2 ) 1 (1 ) (1 )
Total Adjusted EBITDA $ 768 $ 717 $ 907 $ 849 $ 3,241 $ 917
*Recast due to the merger between Williams Partners L.P. and Access Midstream Partners, L.P. and for the change to Modified EBITDA as our measure of segment performance in first quarter 2015.

Pre-merger Williams Partners L.P.

Reconciliation of Non-GAAP Measures

(UNAUDITED)
2014
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
Williams Partners L.P.
Reconciliation of Non-GAAP “Distributable cash flow” to GAAP “Net income”
Net income $ 352 $ 234 $ 218 $ 300 $ 1,104
Income attributable to noncontrolling interests (2 ) (1 ) (7 ) (10 )
Depreciation and amortization 208 207 209 231 855
Non-cash amortization of debt issuance costs included in interest expense 4 3 4 4 15
Equity earnings from investments (23 ) (32 ) (36 ) (41 ) (132 )
Allocated reorganization-related costs
Impairment of certain materials and equipment 17 23 40
Loss related to Geismar Incident 5 5 10
Geismar Incident adjustment for insurance and timing 54 96 (71 ) 79
Contingency (gain) loss, net of legal costs (143 ) (143 )
Reimbursements from Williams under omnibus agreements 3 4 1 3 11
Loss related to Opal incident 6 2 8
Plymouth incident adjustment 3 3 6 12
Canadian income tax 4 8 28 40
Income related to partial acreage dedication release (12 ) (12 )
Maintenance capital expenditures (36 ) (90 ) (103 ) (126 ) (355 )
Distributable cash flow excluding equity investments 562 450 296 214 1,522
Plus: Equity investments cash distributions to Williams Partners L.P. 43 54 71 52 220
Distributable cash flow 605 504 367 266 1,742
Less: Pre-partnership distributable cash flow 23 23
Distributable cash flow attributable to partnership operations $ 582 $ 504 $ 367 $ 266 $ 1,719
Total cash distributed $ 566 $ 577 $ 587 $ $ 1,730
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash distributed 1.03 0.87 0.63 NA NA
Net income divided by Total cash distributed 0.62 0.41 0.37 NA NA
WPZ Net Income to Adjusted EBITDA

2015

2016

2017

(Dollars in millions)

Low Base High Low Base High Low Base High
Net income from continuing operations $ 1,555 $ 1,720 $ 1,885 $ 2,025 $ 2,225 $ 2,425 $ 2,465 $ 2,690 $ 2,915
Add: Net interest expense 855 855 855 965 960 955 1,075 1,065 1,055
Add: Provision for income taxes 15 15 15 25 25 25 25 25 25
Add: Depreciation & amortization (DD&A) 1,705 1,705 1,705 1,800 1,800 1,800 1,875 1,875 1,875
Less: Equity earnings from investments (380 ) (385 ) (390 ) (495 ) (505 ) (515 ) (645 ) (660 ) (675 )
Add: Proportionate share of EBITDA from investments 1 665 670 675 800 810 820 955 970 985
Adjustments 2 (115 ) (115 ) (115 )
Adjusted EBITDA $ 4,300 $ 4,465 $ 4,630 $ 5,120 $ 5,315 $ 5,510 $ 5,750 $ 5,965 $ 6,180

2015

2016

2017

1) Proportionate Share of EBITDA from investments: Low Base High Low Base High Low Base High
Net income from continuing operations $ 380 $ 385 $ 390 $ 495 $ 505 $ 515 $ 645 $ 660 $ 675
Add: Net interest expense 53 53 53 58 58 58 61 61 61
Add: Depreciation & amortization (DD&A) 206 206 206 226 226 226 236 236 236
Other 26 26 26 21 21 21 13 13 13
Adjusted EBITDA from Equity Investments $ 665 $ 670 $ 675 $ 800 $ 810 $ 820 $ 955 $ 970 $ 985

2015

2016

2017

2) Adjustments: Low Base High Low Base High Low Base High
Geismar incident adjustment for insurance and timing ($150 ) ($150 ) ($150 )
ACMP acquisition-related expenses 35 35 35
Total Adjustments ($115 ) ($115 ) ($115 )
WPZ Distributable Cash Flow and Cash Distribution Coverage Ratio

2015

2016

2017

Dollars in millions, except per L.P. unit Low Base High Low Base High Low Base High
Adjusted EBITDA 1 $ 4,300 $ 4,465 $ 4,630 $ 5,120 $ 5,315 $ 5,510 $ 5,750 $ 5,965 $ 6,180
Less: Maintenance Capex 2 (430 ) (430 ) (430 ) (440 ) (440 ) (440 ) (440 ) (440 ) (440 )
Less: Interest Expense (cash portion) 3 (885 ) (885 ) (885 ) (1,000 ) (995 ) (990 ) (1,110 ) (1,100 ) (1,090 )
Less: Cash Taxes (5 ) (5 ) (5 ) (10 ) (10 ) (10 ) (10 ) (10 ) (10 )
Less: Noncontrolling Interests (135 ) (135 ) (135 ) (195 ) (195 ) (195 ) (230 ) (230 ) (230 )
Distributable Cash Flow Attributable to Partnership Operations $ 2,845 $ 3,010 $ 3,175 $ 3,475 $ 3,675 $ 3,875 $ 3,960 $ 4,185 $ 4,410
Cash Distributions (accrued) $ 3,010 $ 3,005 $ 2,995 $ 3,380 $ 3,440 $ 3,515 $ 3,770 $ 3,925 $ 4,090
— per L.P. Unit $ 3.40 $ 3.40 $ 3.40 $ 3.64 $ 3.71 $ 3.78 $ 3.89 $ 4.04 $ 4.19
— Annual growth rate 7 % 9 % 11 % 7 % 9 % 11 %
Cash Distribution Coverage Ratio 0.95x 1.00x 1.06x 1.03x 1.07x 1.10x 1.05x 1.07x 1.08x

Notes: 1 A more detailed schedule reconciling this non-GAAP measure is provided in this presentation. 2 Includes proportionate share of maintenance capex of equity investments. 3 Includes proportionate share of interest expense of equity investments.


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