Williams Partners L.P. Reports Fourth-Quarter and Full-Year 2009 Financial Results
- Net Income is $152.5 Million, $2.88 Per LP Unit for 2009
- Cash Distribution Coverage Ratio is 1.39x for 2009
- Asset Contributions Complete, Transforms Williams Partners to Large, Diversified MLP
- Long-term Gathering Agreement in Marcellus Leads to Midstream Expansion
- Previous 2010-11 Guidance with Strong Cash Distribution Coverage is Affirmed
TULSA, Okla., Feb. 18 /PRNewswire-FirstCall/ -- Williams Partners L.P. (NYSE: WPZ) today announced unaudited 2009 net income of $152.5 million, compared with 2008 net income of $191.4 million. Net income per limited-partner unit for 2009 was $2.88, compared with $3.08 per limited-partner unit for 2008.
Lower natural gas liquid (NGL) margins, driven by lower NGL prices, were the primary reason for the decline in net income for the year. The lower prices were significantly offset by sharply lower natural gas prices and lower operating and maintenance expenses at Four Corners. Gathering volumes at Wamsutter and Four Corners remained steady.
Distributable Cash Flow Improves Throughout '09, Coverage Ratio is 1.39x for the Year
For 2009, the key measure of distributable cash flow per limited partner unit was $3.54, compared with $3.44 for 2008. Distributable cash flow for limited-partner unitholders was $186.7 million for 2009, compared with $181.0 million for the same period in 2008.
Distributable cash flow improved significantly throughout 2009, increasing from $0.56 per limited-partner unit in the first quarter to $1.25 per limited-partner unit in the fourth quarter, an increase of 123 percent.
The 2009 amounts were significantly, favorably impacted by Williams' (NYSE: WMB) waiver of its incentive distribution rights for 2009. The waiver, which was detailed in the partnership's April 15, 2009, press release, decreased the amount of distributable cash flow allocated to the general partner.
The partnership's cash distribution coverage ratio was 1.39x for 2009, which included the benefit of Williams' IDR waiver. Without that benefit, the partnership's cash distribution coverage ratio would have been 1.14x for 2009.
Total distributable cash flow attributable to partnership operations decreased from $260.5 million in 2008 to $190.6 million in 2009 due primarily to lower cash distributions from Discovery and lower results from Four Corners. Lower NGL margins drove the decline in results at Four Corners.
The 2009 earnings and distributable cash flow results above reflect the partnership in its pre-restructuring form. Management is providing 2010-11 earnings and DCF guidance for the partnership in its post-restructuring form later in this press release.
Long-term Gathering Agreement Leads to Marcellus Expansion
Williams Partners also announced an expansion in the Marcellus Shale today, as its midstream business has signed a long-term agreement with Cabot Oil & Gas Corporation (NYSE: COG) for natural gas gathering in Pennsylvania. To support the agreement, the partnership will fund the construction of a 28-mile natural gas gathering pipeline that will gather gas from Cabot's central delivery point in Susquehanna County, Pa. The gas will be delivered to Williams Partners' Transco interstate gas pipeline in Luzerne County, Pa.
Construction is expected to begin on the 20-inch pipeline late this year and it is expected to be placed into service during 2011. This new deal represents the partnership's second significant midstream expansion in the Marcellus Shale. The partnership also owns 51 percent of the joint venture Laurel Mountain Midstream LLC, which encompasses a gathering and processing system in the Marcellus Shale in Pennsylvania.
CEO Perspective
"With the transformational asset contributions from Williams complete, Williams Partners is now a very large, diversified MLP with a significant number of organic growth projects and opportunities throughout our interstate gas pipeline and midstream businesses," said Steve Malcolm, chief executive officer of the general partner of Williams Partners.
"This new expansion in the Marcellus Shale adds to our position in the area and is just the first of many growth projects this year," Malcolm said. "We are currently developing several expansions on both Transco and Northwest Pipeline. We also have ongoing Midstream expansions in the West, such as TXP4 at Echo Springs, and in the deepwater Gulf of Mexico, including Perdido Norte."
Earnings Guidance for 2010-11 Unchanged
The chart below shows Williams Partners' 2010-11 commodity price assumptions and the related outlook for its financial results for 2010-11. The chart reflects the pro-forma post-restructuring reporting of Williams Partners, with Midstream and Gas Pipeline as its reporting segments, which will begin in first-quarter 2010.
The commodity price assumptions and earnings outlook for 2010-11 are unchanged from what the company previously provided on Jan. 19. The guidance range for 2010 growth capital expenditures has been increased by $100 million to a range of $660 million to $870 million. This increase primarily reflects the Midstream expansion in the Marcellus Shale referenced earlier in this press release.
Commodity Price Assumptions
and Average NGL Margins 2010 2011
----------------------------------------------------------------------
Low Midpoint High Low Midpoint High
----------------------------------------------
Natural Gas ($/MMBtu):
NYMEX $4.50 $5.75 $7.00 $5.00 $6.50 $8.00
Rockies $3.90 $5.00 $6.10 $4.35 $5.65 $6.95
San Juan $4.05 $5.15 $6.25 $4.50 $5.85 $7.20
Oil / NGL:
Crude Oil -WTI
($ per barrel) $60 $75 $90 $65 $80 $95
Crude to Gas
Ratio 12.9x 13.1x 13.3x 11.9x 12.5x 13.0x
NGL to Crude Oil
Relationship (1) 53% 56% 59% 53% 55% 57%
Average NGL Margins
($ per gallon) $0.35 $0.51 $0.67 $0.38 $0.51 $0.64
Williams Partners
Pro-Forma Guidance
---------------------
Note: Pro-forma
guidance for
2010 assumes full
year in post-
restructuring form.
Low Midpoint High Low Midpoint High
----------------------------------------------
Distributable Cash Flow
(in millions) (2) $970 $1,225 $1,480 $1,085 $1,315 $1,540
Cash Distributions per
LP Unit (3) $2.63 $2.63 $2.63 TBD TBD TBD
Cash Distribution
Coverage Ratio (2) 1.1x 1.3x 1.6x 1.2x 1.4x 1.7x
Segment Profit (in
millions):
Gas Pipeline $610 $635 $660 $650 $670 $690
Midstream 575 800 1,025 675 875 1,075
--- --- ----- --- --- -----
Total Segment Profit $1,185 $1,435 $1,685 $1,325 $1,545 $1,765
Segment Profit + DD&A
(in millions):
Gas Pipeline $950 $985 $1,020 $1,000 $1,030 $1,060
Midstream 790 1,025 1,260 910 1,120 1,330
--- ----- ----- --- ----- -----
Total Segment Profit +
DD&A $1,740 $2,010 $2,280 $1,910 $2,150 $2,390
Capital Expenditures
(in millions):
Maintenance $290 $310 $330 $300 $320 $340
Growth 660 765 870 375 455 535
--- --- --- --- --- ---
Total Capital
Expenditures $950 $1,075 $1,200 $675 $775 $875
(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 and Cash Distribution Coverage Ratio are non-
GAAP measures. Reconciliations to the most relevant measures included in
GAAP are attached to this news release. Also, the Cash Distribution
Coverage ratio in the chart for 2011 is based on the Cash Distribution per
LP unit level for 2010.
(3) Cash Distributions per LP Unit are based on announced distribution
level for 1Q 2010 of $0.6575 per LP unit. Future distribution
increases will be determined at a later date.
Business Segment Performance
Williams Partners' business segment performance for 2009 is presented in the following table. As previously noted, the partnership's business segment reporting will change beginning with first-quarter 2010 to reflect the new reporting segments as a result of the strategic restructuring.
As the following table reflects 2009 results, the segments are being presented in the pre-restructuring form: Gathering and Processing - West, which includes Four Corners and the Wamsutter investment; Gathering and Processing - Gulf, which includes the Discovery investment; and NGL Services, which includes the Conway fractionation and storage complex.
Consolidated
Segment Profit Full Year 4Q
-----------------------------------------
Amounts in thousands 2009 2008 2009 2008
Gathering and
Processing - West $205,605 $254,162 $62,963 $46,288
Gathering and
Processing - Gulf 26,997 15,847 11,406 (14,590)
NGL Services 19,437 24,038 4,151 8,768
-------- -------- ------- -------
Consolidated
Segment Profit $252,039 $294,047 $78,520 $40,466
======== ======== ======= =======
Recurring Consolidated
Segment Profit*
Amounts in thousands
Gathering and
Processing - West $201,571 $239,493 $62,963 $43,960
Gathering and
Processing - Gulf 26,997 27,047 11,406 (4,280)
NGL Services 19,437 22,601 4,151 7,331
-------- -------- ------- -------
Recurring Consolidated
Segment Profit* $248,005 $289,141 $78,520 $47,011
======== ======== ======= =======
* A schedule reconciling segment profit to recurring segment profit is
attached to this press release.
Lower per-unit NGL margins at Four Corners drove the lower results for recurring consolidated segment profit during the year. Lower operating and maintenance expenses at Four Corners partially offset these negative impacts. The lower operating and maintenance expenses at Four Corners were primarily due to lower system losses.
Reconciliations of the partnership's distributable cash flow for limited-partner unitholders to net income, cash distribution coverage ratio, as well as recurring segment profit to reported segment profit, are available on Williams Partners' web site at www.williamslp.com and as an attachment to this document.
Definitions of Non-GAAP Financial Measures
Williams Partners defines recurring segment profit as segment profit excluding items of income or loss that the partnership characterizes as unrepresentative of its ongoing operations.
Williams Partners defines distributable cash flow attributable to partnership operations as net income (loss) plus depreciation, amortization and accretion, less earnings from equity investments, as well as adjustments for certain non-cash, non-recurring items, plus reimbursements from Williams under an omnibus agreement and less maintenance capital expenditures, plus the actual cash distributed by Wamsutter and Discovery.
Distributable cash flow per limited-partner unit is a key measure of the partnership's financial performance and available cash flows to unitholders. Williams Partners defines distributable cash flow per limited-partner unit as distributable cash flow attributable to partnership operations allocable to limited partners divided by the weighted average limited partner-units outstanding.
Distributable cash flow attributable to partnership operations allocable to limited partners is calculated by allocating the distributable cash flow attributable to partnership operations, as defined in the preceding paragraph, between the general partner and the limited partners in accordance with the cash-distribution provisions of our partnership agreement.
Williams Partners calculates the ratio of distributable cash flow per limited partner unit to the actual cash distribution per unit paid and the ratio of distributable cash flow attributable to partnership operations to the total cash distributed (cash distribution coverage ratio). These two measures reflect the amount of distributable cash flow relative to the partnership's actual cash distribution on both a per limited partner unit and total distribution basis.
Today's Analyst Call
Williams Partners' management will discuss the full-year 2009 results and 2010-11 outlook during a live webcast beginning at 11 a.m. EST today. Participants are encouraged to access the webcast and slides for viewing, downloading and printing at www.williamslp.com.
A limited number of phone lines also will be available at (888) 487-0355. International callers should dial (719) 955-1564. Replays of the year-end webcast, in both streaming and downloadable podcast formats, will be available for two weeks at www.williamslp.com following the event.
Form 10-K
The partnership will file its Form 10-K with the Securities and Exchange Commission during the week of Feb. 22. 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 84 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 to join our e-mail list.
Contact: |
Jeff Pounds |
|
Williams (media relations) |
||
(918) 573-3332 |
||
Sharna Reingold |
||
Williams (investor relations) |
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(918) 573-2078 |
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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 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," 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 report. Many of the factors that could adversely affect our business, results of operations and financial condition 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 the minimum quarterly distribution 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 proposed climate change legislation), environmental liabilities, litigation and rate proceedings;
- Our costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;
- 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 report. 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 26, 2009, and our quarterly reports on Form 10-Q available from our offices or from our website at www.williamslp.com.
SOURCE Williams Partners L.P.
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