Williams Partners L.P. Reports Second-Quarter 2008 Financial Results

TULSA, Okla., Aug 7, 2008 /PRNewswire-FirstCall via COMTEX/ -- WPZ | Quote | Chart | News | PowerRating -- Williams Partners L.P. (NYSE: WPZ | Quote | Chart | News | PowerRating) today announced unaudited second-quarter 2008 net income of $71.8 million, compared with second-quarter 2007 net income of $46.7 million. Net income per limited-partner unit for second-quarter 2008 was $0.92, compared with $0.48 per limited-partner unit for second-quarter 2007.

Year-to-date through June 30, Williams Partners reported net income of $115.5 million, compared with net income of $71.9 million for the first half of 2007. Net income per limited-partner unit for the first half of 2008 was $1.58, compared with $0.79 per limited-partner unit for the same time period last year.

Higher natural gas liquid (NGL) margins at Wamsutter, Four Corners and Discovery were the key drivers of the improved earnings during the second- quarter and year-to-date periods.

Higher operational and maintenance expenses at Four Corners and Conway partially offset these benefits in the second quarter. For the year-to-date period, higher operational and maintenance expenses at Four Corners, lower first-quarter 2008 gathering and processing volumes and higher interest expense due to the Wamsutter acquisition partially offset these benefits.

In second-quarter 2008, the key measure of distributable cash flow per weighted-average limited partner unit was $0.95, compared with $0.73 for second-quarter 2007 -- an increase of 30 percent. Total distributable cash flow in second-quarter 2008 for limited-partner unitholders was $50 million, compared with $28.6 million for second-quarter 2007.

Year-to-date through June 30, distributable cash flow per weighted-average limited partner unit was $1.69, compared with $1.24 for the same time period in 2007 -- an increase of 36 percent. Total distributable cash flow for limited-partner unitholders for the first half of 2008 was $88.8 million, compared with $48.5 million for the first half of 2007.

The significant increase in distributable cash flow during second-quarter and year-to-date 2008 periods is due to the partnership's increased cash distributions from its Wamsutter and Discovery investments and improved results at Four Corners.

For the second quarter, the partnership raised its regular cash distribution to unitholders to $0.625 per unit, making its cash distribution coverage ratio 1.5 for the second quarter. Regular cash distributions to unitholders for the first half of 2008 have totaled $1.225 per unit, making the coverage ratio for the first half of the year 1.4. Maintaining a strong cash distribution coverage ratio helps insulate the partnership's distributions from volatile movements in commodity prices.

Second-quarter and year-to-date 2007 results throughout this release have been recast to reflect the partnership's 2007 acquisitions of an additional 20 percent of Discovery and a membership interest in the Wamsutter system. Because the acquisitions closed in the last half of 2007, those assets' first- and second-quarter 2007 net income was allocated to the general partner as pre-partnership income. As result, a higher portion of the partnership's total net income was allocated to the limited partners in the first six months of 2008, compared with the first six months of 2007.

Chief Operating Officer Perspective

"Williams Partners had an extremely successful second quarter, building on our track record of delivering solid results for our unitholders," said Alan Armstrong, chief operating officer of the general partner of Williams Partners. "We achieved robust growth in both earnings per unit and our key measure of distributable cash flow per unit.

"Our gathering and processing businesses are performing well, particularly in the West, where volumes have recovered following several challenges in the first quarter," Armstrong said. "The return to normal volumes enables us to fully benefit from the continued strong NGL margins."

Business Segment Performance

Business segment performance includes results for the partnership's three business segments: 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 2Q YTD Amounts in thousands 2008 2007 2008 2007 Gathering and Processing - West $86,778 $59,181 $137,183 $101,785 Gathering and Processing - Gulf 8,446 3,670 21,957 7,308 NGL Services 3,414 5,606 8,955 5,659 Consolidated Segment Profit $98,638 $68,457 $168,095 $114,752 Recurring Consolidated Segment Profit* Amounts in thousands Gathering and Processing - West $83,512 $59,181 $130,852 $102,066 Gathering and Processing - Gulf 8,446 3,670 21,957 7,308 NGL Services 3,414 5,606 8,955 7,096 Recurring Consolidated Segment Profit* $95,372 $68,457 $161,764 $116,470 * A schedule reconciling segment profit to recurring segment profit is attached to this press release.

Higher NGL margins were the primary drivers of the second-quarter and year-to-date improvement in the Gathering & Processing -- West segment. Higher net product imbalance losses and slightly lower gathering and processing volumes at Four Corners during the first quarter partially offset these benefits in the year-to-date period. Both the lower volumes and higher net product imbalance losses were impacted by severe winter weather conditions and the shutdown of the Ignacio gas processing plant following the Nov. 28, 2007, fire. The Ignacio plant returned to service on Jan. 18.

Higher gross processing margins at Discovery drove the improvement for Gathering and Processing - Gulf in both the second-quarter and year-to-date periods.

The decline in recurring segment profit for NGL Services during the second quarter was due to higher net product imbalance losses at Conway. Gains and losses from product imbalances are an unpredictable component of operating costs. Higher fractionation and storage revenues and lower operating costs drove the improved results for the year-to-date period.

Reconciliations of the partnership's distributable cash flow for limited-partner unitholders to net income, as well as recurring segment profit to segment profit, are available on Williams Partners' web site at http://www.williamslp.com and as an attachment to this document.

Distributable Cash Flow and Recurring Segment Profit Definitions

Distributable cash flow per weighted average 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, as defined in the following paragraph, attributable to partnership operations plus the cash distributed by Wamsutter and Discovery. The total distributable cash flow attributable to partnership operations is then allocated among the general partner and the limited partners in accordance with the cash-distribution provisions of our partnership agreement. The resulting distributable cash flow attributable to partnership operations and to its limited partners is then divided by the weighted average limited partner-units outstanding to arrive at distributable cash flow per limited-partner unit.

Williams Partners defines distributable cash flow as net income plus depreciation, amortization and accretion, and the amortization of a natural gas purchase contract, less its equity earnings in Wamsutter and Discovery, as well as adjustments for certain non-cash, non-recurring items, plus reimbursements from Williams under an omnibus agreement and less maintenance capital expenditures.

Williams Partners defines recurring segment profit as segment profit excluding items of income or loss that it characterizes as unrepresentative of its ongoing operations. Schedules presenting Williams Partners' consolidated statements of income, segment profit and operating information are available on Williams Partners' web site at http://www.williamslp.com and as an attachment to this document.

Today's Analyst Call

Williams Partners' management will discuss the partnership's second-quarter 2008 financial results during an analyst presentation to be webcast live beginning at 11 a.m. EDT today.

Participants are encouraged to access the webcast at http://www.williamslp.com. Slides are available for viewing, downloading and printing.

A limited number of phone lines also will be available at (877) 558-9190. International callers should dial (706) 902-3248. Replays of the second- quarter webcast, in both streaming and downloadable podcast formats, will be available for two weeks at http://www.williamslp.com following the event.

Form 10-Q

The partnership will file its Form 10-Q with the Securities and Exchange Commission today. 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 publicly traded master limited partnership that owns natural gas gathering, transportation, processing and treating assets serving regions where producers require large scale and highly reliable services, including the Gulf of Mexico, the San Juan Basin in New Mexico and Colorado, and the Washakie Basin in Wyoming. The partnership also serves the natural gas liquids (NGL) market through its NGL fractionating and storage assets. The general partner is Williams Partners GP LLC. More information about the partnership is available at http://www.williamslp.com. Go to http://www.b2i.us/irpass.asp?BzID=1296&to=ea&s=0 to join our e-mail list.

Williams Partners' reports, filings and other public announcements might contain or incorporate by reference forward-looking statements -- statements that do not directly or exclusively relate to historical facts. You typically can identify forward-looking statements by the use of forward-looking words, such as "anticipate," believe," "could," "continue," "estimate," "expect," "forecast," "may," "plan," "potential," "project," "schedule," "will" and other similar words. These statements are based on our intentions, beliefs and assumptions about future events and are subject to risks, uncertainties and other factors. Actual results could differ materially from those contemplated by the forward-looking statements. In addition to any assumptions, risks, uncertainties and other factors referred to specifically in connection with such statements, other factors could cause our actual results to differ materially from the results expressed or implied in any forward-looking statements. Those risks, uncertainties and factors include, among others: Williams Partners may not have sufficient cash from operations to enable it to pay the minimum distribution following establishment of cash reserves and payment of fees and expenses, including payments to our general partner; because of the natural decline in production from existing wells and competitive factors, the success of Williams Partners' gathering and transportation businesses depends on its ability to connect new sources of natural gas supply, which is dependent on factors beyond its control; any decrease in supplies of natural gas could adversely affect Williams Partners' business and operating results; lower natural gas and oil prices could adversely affect Williams Partners' fractionation and storage businesses; Williams Partners' processing, fractionation and storage businesses could be affected by any decrease in natural gas liquids (NGL) prices or a change in NGL prices relative to the price of natural gas; Williams Partners depends on certain key customers and producers for a significant portion of its revenues and supply of natural gas and NGLs and the loss of any of these key customers or producers could result in a decline in its revenues and cash available to pay distributions; if third-party pipelines and other facilities interconnected to Williams Partners' pipelines and facilities become unavailable to transport natural gas and NGLs or to treat natural gas, Williams Partners' revenues and cash available to pay distributions could be adversely affected; Williams Partners does not own all of the interests in Wamsutter LLC (Wamsutter), the Conway fractionator or Discovery Producer Services LLC (Discovery), which could adversely affect Williams Partners' ability to operate and control these assets in a manner beneficial to it; Williams Partners' results of storage and fractionation operations are dependent upon the demand for propane and other NGLs and a substantial decrease in this demand could adversely affect Williams Partners' business and operation results; Discovery and Wamsutter may reduce their cash distributions to Williams Partners in some situations; Discovery's interstate tariff rates and terms and conditions are subject to review and possible adjustment by federal regulators and are subject to changes in policy by federal regulators, which could have a material adverse effect on Williams Partner's business and operating results; Williams Partners' operations are subject to operational hazards and unforeseen interruptions for which it may not be adequately insured; Williams Partners does not operate all of its assets and its reliance on others to operate its assets and to provide other services could adversely affect Williams Partners' business and operating results. Williams Partners' partnership agreement limits its general partner's fiduciary duties to unitholders and restricts the remedies available to unitholders for actions taken by its general partner that might otherwise constitute breaches of fiduciary duty; The Williams Companies, Inc.'s (Williams) public indentures and Williams Partners' credit facility contain financial and operating restrictions that may limit its access to credit; in addition, Williams Partners' ability to obtain credit in the future will be affected by Williams' credit ratings; Williams Partners' future financial and operating flexibility may be adversely affected by restrictions in Williams Partners' debt agreements and by its leverage; Williams Partners may not be able to grow or effectively manage growth; Williams Partners has a holding company structure in which its subsidiaries conduct its operations and own its operating assets, which may affect Williams Partners' ability to make payments on its debt obligations and distributions on its common units; common units held by Williams eligible for future sale may have adverse effects on the price of Williams Partners' common units; Williams controls Williams Partners' general partner, which has sole responsibility for conducting Williams Partners' business and managing its operations; Williams Partners' general partner and its affiliates have conflicts of interests with Williams Partners and limited fiduciary duties, and they may favor their own interests to the detriment of Williams Partners' unitholders; even if unitholders are dissatisfied, they currently have little ability to remove Williams Partners' general partner without its consent. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Investors are urged to closely consider the disclosures and risk factors in Williams Partners' reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission available from Williams Partners' offices or from Williams Partners' website at http://www.williamslp.com.

Contact: Jeff Pounds Williams (media relations) (918) 573-3332 Sharna Reingold Williams (investor relations) (918) 573-2078 Reconciliation of Non-GAAP Measures (UNAUDITED)

This press release includes certain financial measures, Recurring Segment Profit, Distributable Cash Flow and Distributable Cash Flow per Limited Partner Unit that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission.

For Williams Partners L.P., Recurring Segment Profit excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Management believes Recurring 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 (loss) plus depreciation, amortization and accretion, and the amortization of a natural gas purchase contract, less our 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. For our equity investments, Wamsutter and Discovery, we define Distributable Cash Flow as net income (loss) plus depreciation, amortization and accretion and less maintenance capital expenditures. We also adjust for certain non-cash, non-recurring items. Our equity share of Wamsutter's Distributable Cash Flow is based on the distribution provisions of the Wamsutter LLC Agreement. Our equity share of Discovery's Distributable Cash Flow is 60%.

For Williams Partners L.P. we define Distributable Cash Flow per Limited Partner Unit as Distributable Cash Flow, as defined in the preceding paragraph, attributable to partnership operations plus the actual cash distributed by Wamsutter and Discovery. The total Distributable Cash Flow attributable to partnership operations is then allocated between the general partner and the limited partners in accordance with the cash distribution provisions of our partnership agreement. The resulting Distributable Cash Flow attributable to partnership operations and to its limited partners is then divided by the weighted average limited partner units outstanding to arrive at Distributable Cash Flow per Limited Partner Unit.

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 Recurring 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 (loss) or cash flow from operations. Distributable Cash Flow per Limited Partner is not presented as an alternative to net income per unit. 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.

(Thousands, except 2007* 2008 per-unit amounts) 1st Qtr 2nd Qtr Y-T-D 1st Qtr 2nd Qtr Y-T-D Williams Partners L.P. Reconciliation of Non-GAAP "Recurring Segment Profit" to GAAP "Segment Profit" Gathering and Processing - West $42,604 $59,181 $101,785 $50,405 $86,778 $137,183 Gathering and Processing - Gulf 3,638 3,670 7,308 13,511 8,446 21,957 NGL Services 53 5,606 5,659 5,541 3,414 8,955 Segment Profit 46,295 68,457 114,752 69,457 98,638 168,095 Non-recurring Items: Gathering and Processing - West Involuntary conversion gain resulting from Ignacio fire - - - - (3,266) (3,266) Wamsutter customer contract adjustment included in equity earnings - - - (3,065) - (3,065) 2005-2006 retroactive charges for customer contract (848) - (848) - - - Adjust right-of-way prepaid expense 1,243 - 1,243 - - - Adjust 2006 incentive compensation accrual (899) - (899) - - - Adjust asset retirement obligation 785 - 785 - - - NGL Services Product imbalance valuation adjustment 1,437 - 1,437 - - - Recurring Segment Profit $48,013 $68,457 $116,470 $66,392 $95,372 $161,764 * Because Wamsutter and the additional 20% interest in Discovery were affiliates of Williams at the time of these acquisitions, the transactions were between entities under common control, and have been accounted for at historical cost. Accordingly, these tables have been recast to reflect the Equity Earnings in Wamsutter and Discovery throughout the periods presented. (Thousands, except 2007* per-unit amounts) 1st Qtr 2nd Qtr Y-T-D Williams Partners L.P. Reconciliation of Non-GAAP "Distributable Cash Flow per Limited Partner Unit" GAAP "Net income" Net income $25,137 $46,742 $71,879 Depreciation, amortization and accretion 13,178 11,234 24,412 Amortization of natural gas purchase contract 1,188 1,189 2,377 Non-cash amortization of debt issuance costs included in interest expense 404 403 807 Involuntary conversion gain resulting from Ignacio fire - - - Equity earnings (15,259) (24,433) (39,692) Reimbursements from Williams under omnibus agreement 842 825 1,667 Maintenance capital expenditures (a) (7,621) (8,665) (16,286) Distributable Cash Flow Excluding Equity Investments $17,869 $27,295 $45,164 Plus: Wamsutter cash distributions to Williams Partners L.P. - - - Plus: Discovery's cash distributions to Williams Partners L.P. 3,600 10,869 14,469 Distributable cash flow attributable to partnership operations 21,469 38,164 59,633 Distributable Cash Flow attributable to partnership operations allocable to general partner 1,487 9,607 11,094 Distributable Cash Flow attributable to limited partnership operations allocable to limited partners $19,982 $28,557 $48,539 Weighted average number of units outstanding: 39,358,798 39,358,798 39,358,798 Distributable Cash Flow attributable to partnership operations per limited partner unit: $0.51 $0.73 $1.24 (a) Maintenance capital expenditures includes certain well connection capital. Wamsutter Reconciliation of Non-GAAP "Distributable Cash Flow" to GAAP "Net income" Net income $11,328 $20,558 $31,886 Depreciation, amortization and accretion 4,258 4,440 8,698 Maintenance capital expenditures (4,535) (5,763) (10,298) Distributable Cash Flow - 100% $11,051 $19,235 $30,286 Discovery Producer Services Reconciliation of Non-GAAP "Distributable Cash Flow" to GAAP "Net income" Net income $6,551 $6,460 13,011 Depreciation, amortization and accretion 6,483 6,508 12,991 Maintenance capital expenditures (429) (595) (1,024) Distributable Cash Flow - 100% $12,605 $12,373 $24,978 Distributable Cash Flow - our 60% interest $7,563 $7,424 $14,987 (Thousands, except 2008 per-unit amounts) 1st Qtr 2nd Qtr Y-T-D Williams Partners L.P. Reconciliation of Non-GAAP "Distributable Cash Flow per Limited Partner Unit "GAAP "Net income" Net income $43,629 $71,822 $115,451 Depreciation, amortization and accretion 11,226 11,002 22,228 Amortization of natural gas purchase contract - - - Non-cash amortization of debt issuance costs included in interest expense 489 459 948 Involuntary conversion gain resulting from Ignacio fire - (3,266) (3,266) Equity earnings (34,815) (46,050) (80,865) Reimbursements from Williams under omnibus agreement 771 865 1,636 Maintenance capital expenditures (a) (8,534) (2,497) (11,031) Distributable Cash Flow Excluding Equity Investments $12,766 $32,335 $45,101 Plus: Wamsutter cash distributions to Williams Partners L.P. 22,704 26,603 49,307 Plus: Discovery's cash distributions to Williams Partners L.P. 16,800 15,600 32,400 Distributable cash flow attributable to partnership operations 52,270 74,538 126,808 Distributable Cash Flow attributable to partnership operations allocable to general partner 13,431 24,565 37,996 Distributable Cash Flow attributable to limited partnership operations allocable to limited partners $38,839 $49,973 $88,812 Weighted average number of units outstanding: 52,774,728 52,774,728 52,774,728 Distributable Cash Flow attributable to partnership operations per limited partner unit: $0.74 $0.95 $1.69 (a) Maintenance capital expenditures includes certain well connection capital. Wamsutter Reconciliation of Non-GAAP "Distributable Cash Flow" to GAAP "Net income" Net income $21,194 $37,480 $58,674 Depreciation, amortization and accretion 5,228 5,213 10,441 Maintenance capital expenditures (3,245) (6,258) (9,503) Distributable Cash Flow - 100% $23,177 $36,435 $59,612 Discovery Producer Services Reconciliation of Non-GAAP "Distributable Cash Flow" to GAAP "Net income" Net income $22,701 $14,282 36,983 Depreciation, amortization and accretion 6,983 6,802 13,785 Maintenance capital expenditures (187) (285) (472) Distributable Cash Flow - 100% $29,497 $20,799 $50,296 Distributable Cash Flow - our 60% interest $17,698 $12,479 $30,178 * Because Wamsutter and the additional 20% interest in Discovery were affiliates of Williams at the time of these acquisitions, the transactions were between entities under common control, and have been accounted for at historical cost. Accordingly, these tables have been recast to reflect the Equity Earnings in Wamsutter and Discovery throughout the periods presented. Consolidated Statements of Income (UNAUDITED) 2007* (Thousands, except per-unit amounts) 1st Qtr 2nd Qtr Y-T-D Revenues: Product sales: Affiliate $56,552 $62,119 $118,671 Third-party 6,313 5,070 11,383 Gathering and processing: Affiliate 9,491 8,743 18,234 Third-party 51,103 51,422 102,525 Storage 6,410 6,818 13,228 Fractionation 1,917 2,616 4,533 Other 2,029 2,481 4,510 Total revenues 133,815 139,269 273,084 Cost and expenses: Product cost and shrink replacement: Affiliate 21,725 18,520 40,245 Third-party 20,470 26,157 46,627 Operating and maintenance expense: Affiliate 14,328 10,484 24,812 Third-party 28,185 23,759 51,944 Depreciation, amortization and accretion 13,178 11,234 24,412 General and administrative expense: Affiliate 9,406 9,644 19,050 Third-party 664 1,189 1,853 Taxes other than income 2,114 2,626 4,740 Other, net 460 198 658 Total costs and expenses 110,530 103,811 214,341 Operating income 23,285 35,458 58,743 Equity earnings - Wamsutter 11,328 20,558 31,886 Equity earnings - Discovery 3,931 3,875 7,806 Interest expense: Affiliate (15) (15) (30) Third-party (14,355) (14,359) (28,714) Interest income 963 1,225 2,188 Net income $25,137 $46,742 $71,879 Allocation of net income* Net income $25,137 $46,742 $71,879 Allocation of net income to general partner 12,912 22,417 35,329 Allocation of net income to limited partners 12,225 24,325 36,550 Net income, per common and subordinated unit $0.31 $0.48 $0.79 Weighted average number of units outstanding 39,358,798 39,358,798 39,358,798 2008 (Thousands, except per-unit amounts) 1st Qtr 2nd Qtr Y-T-D Revenues: Product sales: Affiliate $78,122 $94,134 $172,256 Third-party 4,221 9,741 13,962 Gathering and processing: Affiliate 8,790 9,847 18,637 Third-party 46,210 49,548 95,758 Storage 7,333 7,102 14,435 Fractionation 3,292 4,804 8,096 Other 2,394 3,069 5,463 Total revenues 150,362 178,245 328,607 Cost and expenses: Product cost and shrink replacement: Affiliate 22,033 27,686 49,719 Third-party 30,065 38,323 68,388 Operating and maintenance expense: Affiliate 23,133 16,548 39,681 Third-party 23,951 29,984 53,935 Depreciation, amortization and accretion 11,226 11,002 22,228 General and administrative expense: Affiliate 9,876 12,385 22,261 Third-party 928 749 1,677 Taxes other than income 2,505 2,167 4,672 Other, net 333 (2,811) (2,478) Total costs and expenses 124,050 136,033 260,083 Operating income 26,312 42,212 68,524 Equity earnings - Wamsutter 21,194 37,480 58,674 Equity earnings - Discovery 13,621 8,570 22,191 Interest expense: Affiliate (25) (15) (40) Third-party (17,648) (16,668) (34,316) Interest income 175 243 418 Net income $43,629 $71,822 $115,451 Allocation of net income* Net income $43,629 $71,822 $115,451 Allocation of net income to general partner 8,911 23,008 31,919 Allocation of net income to limited partners 34,718 48,814 83,532 Net income, per common and subordinated unit $0.66 $0.92 $1.58 Weighted average number of units outstanding 52,774,728 52,774,728 52,774,728 * Because Wamsutter and the additional 20% interest in Discovery were affiliates of Williams at the time of these acquisitions, the transactions were between entities under common control, and have been accounted for at historical cost. Accordingly, these tables have been recast to reflect the Equity Earnings in Wamsutter and Discovery throughout the periods presented. Net income applicable to periods before the acquisitions of these businesses is fully allocated to our general partner, which results in no impact to net income per limited partner unit. Segment Profit & Operating Statistics (UNAUDITED) 2007* 2008 (Thousands) 1st Qtr 2nd Qtr Y-T-D 1st Qtr 2nd Qtr Y-T-D Gathering and Processing - West Segment revenues $120,428 $125,047 $245,475 $132,333 $158,563 $290,896 Product cost and shrink replacement 39,675 42,313 81,988 47,446 61,144 108,590 Operating and maintenance expense 33,097 29,487 62,584 40,893 36,677 77,570 Depreciation, amortization and accretion 12,175 10,203 22,378 10,299 10,136 20,435 Direct general and administrative expenses 1,821 1,797 3,618 1,930 2,058 3,988 Other, net 2,384 2,624 5,008 2,554 (750) 1,804 Segment operating income 31,276 38,623 69,899 29,211 49,298 78,509 Equity earnings 11,328 20,558 31,886 21,194 37,480 58,674 Segment profit $42,604 $59,181 $101,785 $50,405 $86,778 $137,183 Gathering and Processing - Gulf Segment revenues $561 $459 $1,020 $567 $546 $1,113 Operating and maintenance expense 550 361 911 524 519 1,043 Depreciation and accretion 304 303 607 153 151 304 Direct general and administrative expenses - - - - - - Other, net - - - - - - Segment operating loss (293) (205) (498) (110) (124) (234) Equity earnings 3,931 3,875 7,806 13,621 8,570 22,191 Segment profit $3,638 $3,670 $7,308 $13,511 $8,446 $21,957 NGL Services Segment revenues $12,826 $13,763 $26,589 $17,462 $19,136 $36,598 Product cost 2,520 2,364 4,884 4,652 4,865 9,517 Operating and maintenance expense 8,866 4,395 13,261 5,667 9,336 15,003 Depreciation and accretion 699 728 1,427 774 715 1,489 Direct general and administrative expenses 498 470 968 544 700 1,244 Other, net 190 200 390 284 106 390 Segment profit $53 $5,606 $5,659 $5,541 $3,414 $8,955 * Because Wamsutter and the additional 20% interest in Discovery were affiliates of Williams at the time of these acquisitions, the transactions were between entities under common control, and have been accounted for at historical cost. Accordingly, these tables have been recast to reflect the Equity Earnings in Wamsutter and Discovery throughout the periods presented. Williams Partners: Conway storage revenues $6,410 $6,818 $13,228 $7,333 $7,102 $14,435 Conway fractionation volumes (bpd) - our 50% 31,316 36,220 33,781 33,103 38,173 35,638 Carbonate Trend gathering volumes (BBtu/d) 25 19 22 24 23 23 Williams Four Corners: Gathering volumes (BBtu/d) 1,453 1,462 1,457 1,316 1,410 1,363 Fee-based processing volumes (BBtu/d) 866 872 869 796 896 846 NGL equity sales (million gallons) 46 39 85 36 43 79 NGL margin ($/gallon) $0.41 $0.53 $0.46 $0.74 $0.78 $0.76 NGL production (million gallons) 140 137 277 112 140 252 Wamsutter - 100%: Gathering volumes (BBtu/d) 510 522 516 434 521 477 Fee-based processing volumes (BBtu/d) 302 312 307 252 312 282 NGL equity sales (million gallons) 28 27 55 41 36 77 NGL margin ($/gallon) $0.27 $0.40 $0.33 $0.58 $0.63 $0.60 NGL production (million gallons) 101 103 204 106 114 220 Discovery Producer Services - 100% Plant inlet volumes (BBtu/d) 548 616 582 627 614 621 Gross processing margin ($/MMBtu) $0.23 $0.24 $0.24 $0.45 $0.36 $0.41 NGL equity sales (million gallons) 18 25 43 37 23 60 NGL production (million gallons) 56 66 122 70 58 128

SOURCE Williams Partners L.P.

http://www.williamslp.com

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