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Williams Partners Reports First-Quarter 2011 Financial Results

May 4, 2011

TULSA, Okla., May 4, 2011 /PRNewswire/ — Williams Partners L.P. (NYSE: WPZ) today announced unaudited first-quarter 2011 net income of $307 million, compared with first-quarter 2010 net income of $322 million.


    Summary Financial Information           1Q
    Amounts in millions, except
     per-unit amounts.              2011        2010
                                    ----        ----
    (Unaudited)

    Net income                      $307        $322
                                    ====        ====
    Net income per common L.P.
     unit                          $0.81       $0.61
                                   =====       =====

    Distributable cash flow (DCF)
     (1)                            $441        $431
    Less: Pre-partnership DCF (2)      -       (158)
                                     ---        ----
    DCF attributable to
     partnership operations         $441        $273
                                    ====        ====

    Cash distribution coverage
     ratio (1)                     1.60x       1.76x
                                   =====       =====

    (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) For 2010, this amount represents DCF for January 2010 from the assets
     acquired in February 2010 and DCF for January-March 2010 from the
     assets acquired in November 2010, since these periods were prior to the
     receipt of cash flows from the acquired assets.

Higher net interest expense of $37 million primarily associated with new debt issuances made in conjunction with financing assets acquired from Williams (NYSE: WMB) in 2010 significantly reduced 2011 net income compared with the recast 2010 results. The higher interest expense drove the decline in net income for first-quarter 2011.

Higher fee-based revenue and higher natural gas liquid (NGL) margins in the midstream business and improvement in the gas pipeline business partially offset the higher interest expense in the first quarter. There is a more detailed discussion of the midstream and gas pipeline results in the business segment performance section below.

The results throughout this release have been recast to reflect the fourth-quarter 2010 asset acquisition from Williams. In the recasting of the partnership’s net income, all of the acquired assets’ net income occurring prior to the closing date was allocated to Williams, which resulted in a lower allocation of net income to limited partners for first-quarter 2010.

Net income per common limited-partner unit for first-quarter 2011 was $0.81, compared with $0.61 per unit for first-quarter 2010.

Asset Acquisitions Drive Substantial Increases in Distributable Cash Flow in 2010

For first-quarter 2011, Williams Partners’ distributable cash flow attributable to partnership operations was $441 million, compared with $273 million for first-quarter 2010.

The substantial increase in DCF attributable to partnership operations is primarily due to the growth of the partnership via the first-quarter 2010 asset acquisitions.

CEO Perspective

“It’s been just over a year since Williams Partners was transformed into one of the largest energy MLPs, and we continue to perform well, in terms of generating cash flow and distribution growth,” said Alan Armstrong, president and chief executive officer of the general partner of Williams Partners. “Our cash distribution for the first quarter was 9 percent higher than last year and we’ve increased our earnings guidance for both 2011 and 2012.

“We also continue to bring new growth projects online, in both the gas pipeline and midstream businesses,” Armstrong said. “In addition to our growth opportunities in the Marcellus Shale, we’re also expecting some significant growth projects in the Gulf of Mexico over the next two years.”

Higher Expected NGL Margins Drive Earnings Guidance Increase

Williams Partners is raising its adjusted segment profit guidance 7 percent for 2011 and 5 percent for 2012 based on higher expected per-unit NGL margins and benefits of growth capital. Capital expenditure guidance is higher for 2011 and 2012, reflecting the previously announced acquisition of an additional 24.5-percent interest in the Gulfstream interstate gas pipeline system, as well as other new projects in the Gulf of Mexico.

Williams Partners’ guidance for quarterly cash distributions is unchanged. It continues to expect to increase distributions to its limited-partner unitholders by approximately 6 to 10 percent annually. These increases will also drive increases in incentive distributions to Williams, the partnership’s general partner.

Williams Partners’ updated assumptions for certain energy commodity prices for 2011-12 and the corresponding guidance for the partnership’s earnings and capital expenditures are displayed in the following table.


    Commodity Price Assumptions and Average
     NGL Margins                                              2011
    ---------------------------------------                   ----
    As of May 4, 2011
                                             Low     Mid    High
                                             ---     ---    ----
    Natural Gas ($/MMBtu):
        NYMEX                                $3.40   $4.25   $5.10
        Rockies                              $3.10   $3.85   $4.60
        San Juan                             $3.20   $4.00   $4.80

    Oil / NGL:
        Crude Oil - WTI ($ per barrel)         $80     $95    $110
        Crude to Gas Ratio                   21.6x   22.5x   23.5x
        NGL to Crude Oil Relationship (1)       52%     52%     52%

    Average NGL Margins ($ per gallon)       $0.64   $0.76   $0.88

    Williams Partners Guidance
    --------------------------
    Amounts are in millions except coverage
     ratio.
                                             Low     Mid    High
                                             ---     ---    ----
    DCF attributable to partnership ops.
     (2)                                    $1,270  $1,470  $1,670

    Total Cash Distribution (3)             $1,142  $1,171  $1,200

    Cash Distribution Coverage Ratio (2)     1.1x    1.3x    1.4x

    Adjusted Segment Profit (2):
        Gas Pipeline                          $670    $690    $710
        Midstream                            1,025   1,200   1,375
                                             -----   -----   -----
    Total Adjusted Segment Profit           $1,695  $1,890  $2,085

    Adjusted Segment Profit + DD&A:
        Gas Pipeline                        $1,020  $1,050  $1,080
        Midstream                            1,285   1,470   1,655
                                             -----   -----   -----
    Total Adjusted Segment Profit + DD&A    $2,305  $2,520  $2,735

    Capital Expenditures:
        Maintenance                           $470    $493    $515
        Growth                               1,420   1,560   1,700
                                             -----   -----   -----
    Total Capital Expenditures              $1,890  $2,053  $2,215


    Commodity Price Assumptions and Average
     NGL Margins                                              2012
    ---------------------------------------                   ----
    As of May 4, 2011
                                             Low     Mid    High
                                             ---     ---    ----
    Natural Gas ($/MMBtu):
        NYMEX                                $4.00   $5.00   $6.00
        Rockies                              $3.65   $4.55   $5.45
        San Juan                             $3.70   $4.65   $5.60

    Oil / NGL:
        Crude Oil - WTI ($ per barrel)         $80     $95    $110
        Crude to Gas Ratio                   18.3x   19.2x   20.0x
        NGL to Crude Oil Relationship (1)       51%     53%     54%

    Average NGL Margins ($ per gallon)       $0.56   $0.73   $0.90

    Williams Partners Guidance
    --------------------------
    Amounts are in millions except coverage
     ratio.
                                             Low     Mid    High
                                             ---     ---    ----
    DCF attributable to partnership ops.
     (2)                                    $1,460  $1,710  $1,960

    Total Cash Distribution (3)             $1,283  $1,358  $1,433

    Cash Distribution Coverage Ratio (2)     1.1x    1.3x    1.4x

    Adjusted Segment Profit (2):
        Gas Pipeline                          $680    $700    $720
        Midstream                            1,100   1,350   1,600
                                             -----   -----   -----
    Total Adjusted Segment Profit           $1,780  $2,050  $2,320

    Adjusted Segment Profit + DD&A:
        Gas Pipeline                        $1,040  $1,070  $1,100
        Midstream                            1,375   1,635   1,895
                                             -----   -----   -----
    Total Adjusted Segment Profit + DD&A    $2,415  $2,705  $2,995

    Capital Expenditures:
        Maintenance                           $410    $445    $480
        Growth                               1,070   1,185   1,300
                                             -----   -----   -----
    Total Capital Expenditures              $1,480  $1,630  $1,780
    (1) This is calculated as the price of natural gas liquids as a
    percentage of the price of crude oil on an equal volume basis.
    (2) Distributable Cash Flow, Cash Distribution Coverage Ratio and
    Adjusted Segment Profit 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 reflects an approximate 6%
    (low), 8% (midpoint), and 10% (high) increase in quarterly limited
    partner cash distributions annually through 2012.

Business Segment Performance

Williams Partners’ operations are reported through two business segments, Gas Pipeline and Midstream Gas & Liquids.


    Consolidated Segment
     Profit                       1Q
                                 ---
    Amounts in millions    2011      2010
                           ----      ----

    Gas Pipeline           $175      $169
    Midstream Gas &
     Liquids                262       255
                            ---       ---
    Total Segment Profit   $437      $424

    Adjustments               -        (5)
                            ---       ---

    Adjusted Segment
     Profit*               $437      $419
                           ====      ====
    * A schedule reconciling segment profit to adjusted segment profit is
    attached to this press release.

Gas Pipeline

Williams Partners owns interests in three major interstate natural gas pipeline systems – Transco, Northwest Pipeline and Gulfstream. Transco and Northwest Pipeline have a combined total annual throughput of approximately 2,800 trillion British Thermal Units of natural gas, which is approximately 12 percent of the natural gas consumed in the United States. Combined peak-day delivery capacity is approximately 13 billion cubic feet per day (Bcf/d).

Gas Pipeline reported segment profit of $175 million for first-quarter 2011, compared with $169 million for first-quarter 2010.

The improvement in the Gas Pipeline results for the first quarter was due to higher transportation revenue, partially offset by higher selling, general and administrative expenses. The quarter also benefited from $10 million of project feasibility costs previously expensed that were capitalized in the first quarter as a result of determining that the project was probable of development.

In addition to the above contracts, the gas pipeline business continues to make progress on a number of expansion projects in 2011. Two expansions on the Transco system – Mobile Bay South II and 85 North phase II – were placed into service this week adding a combined 598,500 dekatherms per day of firm transportation capacity to serve markets in the southeastern United States.

The Mobile Bay South II expansion project created an additional 380,000 dekatherms per day of southbound firm transportation capacity on the Mobile Bay Lateral from Transco’s mainline at Station 85 near Butler, Ala., to its interconnect with Gulfstream Natural Gas System in Coden, Ala., at an estimated cost of $35 million.

The second phase of the company’s 85 North expansion project, increases Transco’s capacity by an additional 218,500 dekatherms per day to serve electric power generating facilities in North Carolina. Phase I of the 85 North expansion was placed into service in July 2010, adding capacity to transport an additional 90,000 dekatherms of natural gas per day. The total cost including Phase I and Phase II is estimated to be $227 million.

Midstream Gas & Liquids

Midstream provides natural gas gathering, treating, and processing; deepwater production handling and oil transportation; and NGL fractionation, storage and transportation services.

The business reported segment profit of $262 million for first-quarter 2011, compared with segment profit of $255 million for first-quarter 2010.

Higher per-unit NGL margins and fee-based revenues, mostly offset by higher operating expenses, drove the improvement in the first-quarter 2011 results.

Lower natural gas prices and slightly higher per-unit NGL prices drove the higher NGL margins in first-quarter 2011. This benefit was partially offset by lower NGL equity volumes in the first quarter primarily due to the change of a major contract in the Gulf Coast region from keep-whole to percent-of-liquids processing. The decline in first-quarter 2011 equity volumes compared with fourth-quarter 2010 was primarily due to the major contract change, as well as severe winter weather in the Rockies and maintenance outages.

A gathering rate increase in the Piceance Basin associated with the assets acquired from Williams in November 2010 and new gathering business in the Marcellus Shale drove the higher fee-based revenues for the first-quarter.


    NGL Margin Trend                                  2010        2011
                                                      ----        ----
                                  1Q     2Q     3Q     4Q          1Q
                                 ---    ---    ---    ---         ---

    NGL margins (millions)       $193   $166   $136   $200        $207

    NGL equity volumes
     (gallons in millions)        332    302    271    317         289

    Per-unit NGL margins
     ($/gallon)                 $0.58  $0.55  $0.50  $0.63       $0.71

The midstream business will continue work on several ongoing expansion projects in 2011.

Williams Partners became operator of Overland Pass Pipeline Company effective April 1, 2011. The partnership owns a 50-percent interest in Overland Pass, which includes a 760-mile NGL pipeline from Opal, Wyo., to the Mid-Continent NGL market center in Conway, Kan., along with 150- and 125-mile extensions into the Piceance and Denver-Julesburg Basins in Colorado, respectively. Work is under way to determine optimal expansions to serve producers in the Overland Pass corridor.

The partnership also continues to ramp up activities on its expansions in the Marcellus Shale. It has assumed the operational activities for the gathering business it acquired at the end of 2010, which includes 75 miles of gathering pipelines and two compressor stations.

Engineering and construction activities continue on the 33-mile Springville gathering pipeline in northeast Pennsylvania which will connect the gathering system in northeast Pennsylvania to the Transco pipeline system. The Springville pipeline connection is expected to be completed later in 2011. Other compression and dehydration projects to increase capacity to approximately 500-550 MMcf/d are nearing completion and expected to be in service by the end of the second quarter of 2011. The partnership’s gathering system in northeast Pennsylvania is expected to ultimately provide 1.25 Bcf/d of gathering capacity.

Williams Partners also continues to work on rapid expansion of the Laurel Mountain Midstream joint venture in western Pennsylvania. The initial phase of the Shamrock compressor station, which will likely be the largest central delivery point out of the Laurel Mountain system, was placed into service in the first quarter. The Shamrock compressor station provides 30 MMcf/d of new capacity on the Laurel Mountain system, with another 150 MMcf/d expected to be available by the end of 2011. Williams Partners expects Laurel Mountain to ultimately provide approximately 1.5 Bcf/d of gathering capacity.

Definitions of Non-GAAP Financial Measures

This press release includes certain financial measures – Distributable Cash Flow, Cash Distribution Coverage Ratio, and Adjusted Segment Profit – that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission.

For Williams Partners L.P., Adjusted Segment Profit excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Management believes Adjusted Segment Profit provides investors meaningful insight into Williams Partners L.P.’s results from ongoing operations.

For Williams Partners L.P. we define Distributable Cash Flow as net income 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 payments and/or reimbursements under omnibus agreements with Williams and certain other items. Total Distributable Cash Flow is reduced by any amounts associated with operations, which occurred prior to our ownership of the underlying assets to arrive at Distributable Cash Flow attributable to partnership operations.

For Williams Partners L.P. we also calculate the ratio of Distributable Cash Flow attributable to partnership operations 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 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.

New Quarterly Presentation Format, Analyst Call/Webcast Tomorrow

Utilizing its new format for quarterly earnings and outlook, the first-quarter slide presentation, data book and analyst package will be available shortly for viewing, downloading, and printing at www.williamslp.com. Williams Partners will also be providing the quarterly presentation with audio commentary by CEO Alan Armstrong.

Management will be available to discuss the first-quarter 2011 results and 2011-12 outlook during a live analyst call/webcast beginning at 11 a.m. EDT tomorrow. Links to the live webcast will be available on Williams Partners’ web site. A limited number of phone lines also will be available at (888) 516-2438. International callers should dial (719) 325-2190.

Replays of the first-quarter analyst call/webcast in both streaming and downloadable podcast formats will be available for two weeks following the event at www.williamslp.com.

Form 10-Q

The partnership plans to file its first-quarter 2011 Form 10-Q with the Securities and Exchange Commission (SEC) this week. The document will be available on both the SEC and Williams Partners web sites.

About Williams Partners L.P. (NYSE: WPZ)

Williams Partners L.P. is a leading diversified master limited partnership focused on natural gas transportation; gathering, treating, and processing; storage; natural gas liquid (NGL) fractionation; and oil transportation. The partnership owns interests in three major interstate natural gas pipelines that, combined, deliver 12 percent of the natural gas consumed in the United States. The partnership’s gathering and processing assets include large-scale operations in the U.S. Rocky Mountains and both onshore and offshore along the Gulf of Mexico. Williams (NYSE: WMB) owns approximately 75 percent of Williams Partners, including the general-partner interest. More information is available at www.williamslp.com. Go to http://www.b2i.us/irpass.asp?BzID=1296&to=ea&s=0 or http://www.b2i.us/irpass.asp?BzID=630&to=ea&s=0 to join our email list.

Williams Partners L.P. is a limited partnership formed by The Williams Companies, Inc. (Williams). Our reports, filings, and other public announcements 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. 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,” 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:

  • 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;
  • The levels of cash distributions to unitholders;
  • Seasonality of certain business segments; and
  • Natural gas and natural gas liquids prices and demand.

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 announcement. 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 we have sufficient cash from operations to enable us to maintain current levels of cash distributions or to pay cash distributions following establishment of cash reserves and payment of fees and expenses, including payments to our general partner;
  • Availability of supplies (including the uncertainties inherent in assessing and estimating future natural gas reserves), market demand, volatility of prices, and the availability and cost of capital;
  • Inflation, interest 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;
  • Development of alternative energy sources;
  • The impact of operational and development hazards;
  • Costs of, changes in, or the results of laws, government regulations (including climate change legislation and/or potential additional regulation of drilling and completion of wells), 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;
  • Risks related to strategy and financing, including restrictions stemming from our debt agreements, future changes in our credit ratings and the availability and cost of credit;
  • Risks associated with future weather conditions;
  • Acts of terrorism; 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 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 may cause our intentions to change from those statements of intention set forth in this announcement. 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 interests 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. Investors are urged to closely consider the disclosures and risk factors in our annual report on Form 10-K filed with the SEC on February 24, 2011, and our quarterly reports on Form 10-Q available from our offices or from our website at www.williamslp.com.


    Reconciliation of Non-GAAP Measures
    -----------------------------------
    (UNAUDITED)
    -----------

    This press release includes certain financial measures, Adjusted
     Segment Profit and Distributable Cash Flow that are non-GAAP
     financial measures as defined under the rules of the Securities and
     Exchange Commission.
    For Williams Partners L.P., Adjusted Segment Profit excludes items of
     income or loss that we characterize as unrepresentative of our
     ongoing operations.  Management believes Adjusted Segment Profit
     provides investors meaningful insight into Williams Partners L.P.'s
     results from ongoing operations.
    For Williams Partners L.P. we define Distributable Cash Flow as net
     income plus depreciation and amortization and cash distributions
     from our equity investments less our earnings from equity
     investments, distributions to noncontrolling interests and
     maintenance capital expenditures.  We also adjust for payments and/
     or reimbursements under omnibus agreements with Williams and certain
     non-cash adjustments.  Total Distributable Cash Flow is reduced by
     any amounts associated with operations, which occurred prior to our
     ownership of the underlying assets to arrive at Distributable Cash
     Flow attributable to partnership operations.
    For Williams Partners L.P. we also calculate the ratio of
     Distributable Cash Flow attributable to partnership operations 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 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.
    ---------------------------------------------------------------------


                                                             2010
                                                             ----
    (Dollars in millions, except coverage      1st    2nd    3rd    4th
     ratios)                                   Qtr    Qtr    Qtr    Qtr
    -------------------------------------     ----   ----   ----   ----

      Williams Partners L.P.
      Reconciliation of Non-GAAP
       "Distributable Cash Flow" to GAAP "Net
       income"

      Net income                               $322   $240   $253    $286
      Depreciation and amortization             140    140    140     148
      Non-cash amortization of debt issuance
       costs included in interest expense         4      5      5       5
      Equity earnings from investments          (26)   (27)   (24)    (32)
      Distributions to noncontrolling
       interests                                 (6)    (6)    (6)      -
      Involuntary conversion gain resulting
       from Ignacio fire                          -     (4)     -       -
      Involuntary conversion gain resulting
       from Hurricane Ike                         -     (7)    (7)      -
      Impairment of certain gathering assets      -      -      -       9
      Reimbursements (payments) from/(to)
       Williams under omnibus agreement           -     (1)     1       3
      Maintenance capital expenditures          (32)   (46)  (119)   (104)
                                                ---    ---   ----    ----

      Distributable Cash Flow excluding
       equity investments                       402    294    243     315
      Plus: Equity investments cash
       distributions to Williams Partners
       L.P.                                      29     43     29      32
                                                ---    ---    ---     ---

      Distributable Cash Flow                   431    337    272     347
      Less: Pre-partnership Distributable
       Cash Flow                                158     21     32      12
                                                ---    ---    ---     ---

      Distributable cash flow attributable to
       partnership operations                  $273   $316   $240    $335
                                               ====   ====   ====    ====

      Total cash distributed:                  $155   $221   $250    $268

      Coverage ratios:
      Distributable cash flow attributable to
       partnership operations divided by
       Total cash distributed                  1.76   1.43   0.96    1.25
                                               ====   ====   ====    ====

      Net income divided by Total cash
       distributed                             2.08   1.09   1.01    1.07
                                               ====   ====   ====    ====


                                                    2010         2011
                                                    ----         ----
                                                                       1st
    (Dollars in millions, except coverage ratios)         Year         Qtr
    ---------------------------------------------         ----        ----

      Williams Partners L.P.
      Reconciliation of Non-GAAP "Distributable
       Cash Flow" to GAAP "Net income"

      Net income                                         $1,101       $307
      Depreciation and amortization                         568        150
      Non-cash amortization of debt issuance costs
       included in interest expense                          19          5
      Equity earnings from investments                     (109)      (25)
      Distributions to noncontrolling interests             (18)         -
      Involuntary conversion gain resulting from
       Ignacio fire                                          (4)         -
      Involuntary conversion gain resulting from
       Hurricane Ike                                        (14)         -
      Impairment of certain gathering assets                  9          -
      Reimbursements (payments) from/(to) Williams
       under omnibus agreement                                3          8
      Maintenance capital expenditures                     (301)      (34)
                                                           ----        ---

      Distributable Cash Flow excluding equity
       investments                                        1,254        411
      Plus: Equity investments cash distributions
       to Williams Partners L.P.                            133         30
                                                            ---        ---

      Distributable Cash Flow                             1,387        441
      Less: Pre-partnership Distributable Cash
       Flow                                                 223          -
                                                            ---        ---

      Distributable cash flow attributable to
       partnership operations                            $1,164       $441
                                                         ======       ====

      Total cash distributed:                              $894       $276

      Coverage ratios:
      Distributable cash flow attributable to
       partnership operations divided by Total cash
       distributed                                         1.30       1.60
                                                           ====       ====

      Net income divided by Total cash distributed         1.23       1.11
                                                           ====       ====


    Reconciliation of GAAP
     "Segment Profit" to Non-
     GAAP "Adjusted Segment
     Profit"
    (UNAUDITED)

                                                                       2010
                                                                       ----
                                          1st    2nd    3rd    4th
    (Dollars in millions)                 Qtr    Qtr    Qtr    Qtr   Year
    ---------------------                ----   ----   ----   ----   ----

      Gas Pipeline                        $169   $148   $161   $159    $637
      Midstream Gas & Liquids              255    213    210    259     937

      Segment Profit                      $424   $361   $371   $418  $1,574
                                          ====   ====   ====   ====  ======

      Adjustments:
      Gas Pipeline
      ------------
        Unclaimed property assessment
         accrual adjustment -TGPL            -     (1)     -      -      (1)
        Unclaimed property assessment
         accrual adjustment -NWP             -     (1)     -      -      (1)
        Loss related to Eminence
         storage facility leak               -      -      -      5       5
        Gain on sale of base gas from
         Hester storage field               (5)    (3)     -      -      (8)
                                           ---    ---    ---    ---     ---
           Total Gas Pipeline
            adjustments                     (5)    (5)     -      5      (5)

      Midstream Gas & Liquids
      -----------------------
        Involuntary conversion gain
         related to Ignacio                  -     (4)     -      -      (4)
        Involuntary conversion gain
         related to Hurricane Ike            -     (7)    (7)     -     (14)
        Gain on sale of certain
         assets                              -      -    (12)     -     (12)
        Impairment of certain
         gathering assets                    -      -      -      9       9
        Settlement gain related to
         Green Canyon development            -      -      -     (6)     (6)
                                           ---    ---    ---    ---     ---
           Total Midstream Gas & Liquids
            adjustments                      -    (11)   (19)     3     (27)

        Total adjustments included in
         segment profit                     (5)   (16)   (19)     8     (32)

      Adjusted segment profit             $419   $345   $352   $426  $1,542
                                          ====   ====   ====   ====  ======


    Reconciliation of GAAP "Segment Profit"
     to Non-GAAP "Adjusted Segment Profit"
    (UNAUDITED)

                                                       2011
                                                       ----
                                                       1st
    (Dollars in millions)                              Qtr
    ---------------------                             ----

      Gas Pipeline                                     $175
      Midstream Gas & Liquids                           262

      Segment Profit                                   $437
                                                       ====

      Adjustments:
      Gas Pipeline
      ------------
        Unclaimed property assessment accrual
         adjustment -TGPL                                 -
        Unclaimed property assessment accrual
         adjustment -NWP                                  -
        Loss related to Eminence storage
         facility leak                                    4
        Gain on sale of base gas from Hester
         storage field                                   (4)
                                                        ---
           Total Gas Pipeline adjustments                 -

      Midstream Gas & Liquids
      -----------------------
        Involuntary conversion gain related to
         Ignacio                                          -
        Involuntary conversion gain related to
         Hurricane Ike                                    -
        Gain on sale of certain assets                    -
        Impairment of certain gathering assets            -
        Settlement gain related to Green Canyon
         development                                      -
                                                        ---
           Total Midstream Gas & Liquids
            adjustments                                   -

        Total adjustments included in segment
         profit                                           -

      Adjusted segment profit                          $437
                                                       ====


    Williams Partners L.P.
    (UNAUDITED)
                                                       Full Year Forecasted
                                                                2011
                                                       ---------------------
    (Dollars in millions, except coverage ratios)      Low   Midpoint   High
    ---------------------------------------------      ---   --------   ----

    Reconciliation of Non-GAAP "Distributable Cash
     Flow attributable to partnership operations" to
     GAAP "Net income"

    Net income                                       $1,135    $1,335  $1,535
    Depreciation and amortization                       610       630     650
    Other                                                25        28      30
    Maintenance capital expenditures                   (500)     (523)   (545)
                                                       ----      ----    ----

    Distributable cash flow attributable to
     partnership operations                          $1,270    $1,470  $1,670
                                                     ======    ======  ======

    Total cash to be distributed *                   $1,142    $1,171  $1,200

    Coverage ratios:

    Distributable cash flow attributable to
     partnership operations divided by Total cash
     distributed *                                      1.1       1.3     1.4
                                                        ===       ===     ===

    Net income divided by Total cash distributed *      1.0       1.1     1.3
                                                        ===       ===     ===

    * Distributions reflect growth rates of 6-10%.

    Reconciliation of Non-GAAP "Adjusted Segment
     Profit" to GAAP "Segment Profit"

    Segment Profit:
      Midstream                                      $1,025    $1,200  $1,375
      Gas Pipeline                                      670       690     710
                                                        ---       ---     ---
    Total Segment Profit                              1,695     1,890   2,085
    Adjustments:
      Gas Pipeline -Gain on sale of base gas from
       Hester storage                                    (4)       (4)     (4)
      field
      Gas Pipeline -Loss related to Eminence storage
       facility leak                                      4         4       4
    Adjusted segment profit                          $1,695    $1,890  $2,085
                                                     ======    ======  ======


                                                      Full Year Forecasted
                                                                2012
                                                       ---------------------
    (Dollars in millions, except coverage ratios)      Low   Midpoint  High
    ---------------------------------------------      ---   --------  ----

    Reconciliation of Non-GAAP "Distributable Cash
     Flow attributable to partnership operations" to
     GAAP "Net income"

    Net income                                       $1,225    $1,490  $1,755
    Depreciation and amortization                       635       655     675
    Other                                                10        10      10
    Maintenance capital expenditures                   (410)     (445)   (480)
                                                       ----      ----    ----

    Distributable cash flow attributable to
     partnership operations                          $1,460    $1,710  $1,960
                                                     ======    ======  ======

    Total cash to be distributed *                   $1,283    $1,358  $1,433

    Coverage ratios:

    Distributable cash flow attributable to
     partnership operations divided by Total cash
     distributed *                                      1.1       1.3     1.4
                                                        ===       ===     ===

    Net income divided by Total cash distributed *      1.0       1.1     1.2
                                                        ===       ===     ===

    * Distributions reflect growth rates of 6-10%.

    Reconciliation of Non-GAAP "Adjusted Segment
     Profit" to GAAP "Segment Profit"

    Segment Profit:
      Midstream                                      $1,100    $1,350  $1,600
      Gas Pipeline                                      680       700     720
                                                        ---       ---     ---
    Total Segment Profit                              1,780     2,050   2,320
    Adjustments:
      Gas Pipeline -Gain on sale of base gas from
       Hester storage                                     -         -       -
      field
      Gas Pipeline -Loss related to Eminence storage
       facility leak                                      -         -       -
    Adjusted segment profit                          $1,780    $2,050  $2,320
                                                     ======    ======  ======


    MEDIA CONTACT:  INVESTOR CONTACTS:
                     Travis        Sharna        David
    Jeff Pounds      Campbell      Reingold      Sullivan
                      (918)         (918)         (918)
    (918) 573-3332   573-2944      573-2078      573-9360

SOURCE Williams Partners L.P.


Source: newswire



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