OREANDA-NEWS.  Williams Partners L.P. (NYSE: WPZ) announced unaudited 2013 net income of USD 1.07 billion, or USD 1.45 per common limited-partner unit, compared with 2012 net income of USD 1.23 billion, or USD 1.89 per common limited-partner unit.

The USD 165 million decrease in 2013 net income was primarily due to USD 297 million or 39 percent lower natural gas liquid (NGL) margins as well as lost production at the Geismar olefins plant in the third and fourth quarters. The decrease was partially offset by a USD 209 million, or 8 percent, increase in fee-based revenues and by USD 50 million of initial insurance recoveries related to the Geismar incident.

For fourth-quarter 2013, Williams Partners reported net income of USD 211 million, or USD 0.12 per common limited-partner unit, compared with USD 291 million, or USD 0.42 per common limited-partner unit, for fourth-quarter 2012.

The USD 80 million decrease in fourth-quarter net income was primarily due to USD 77 million in lost production at the Geismar olefins plant as well as USD 43 million or 28 percent lower NGL margins. In addition, certain settlement resolutions and higher operating costs related to our rapidly growing Northeast G&P segment reduced net income. The decrease was offset by a USD 58 million, or 8 percent, increase in fee-based revenues as well as the absence of allocated reorganization-related costs in 2012.

There is a more detailed analysis of the partnership's businesses later in this news release. Prior-period results throughout this release have been recast to include the results of the Geismar olefins production facility acquired from Williams in November 2012 and to reflect the revised segment reporting resulting from the organizational restructuring effective Jan. 1, 2013.

Distributable Cash Flow & Distributions

For 2013, Williams Partners generated USD 1.77 billion in DCF attributable to partnership operations, compared with USD 1.49 billion in DCF attributable to partnership operations in 2012.

For the fourth quarter of 2013, Williams Partners generated USD 509 million in DCF attributable to partnership operations, compared with USD 405 million for the fourth quarter of 2012.

The USD 282 million increase in DCF for the year was driven by growth in fee-based revenues and lower maintenance capital spending primarily on lower required pipeline integrity projects and one time maintenance capital items in 2012 at our regulated entities. Expected business interruption insurance recoveries related to the Geismar olefin plant incident contributed USD 123 million to DCF in 2013, of which USD 50 million was received in the third quarter. These factors more than offset USD 297 million lower NGL margins.

Williams Partners recently announced that it increased its quarterly cash distribution to unitholders to USD 0.8925 per unit, a 7.9-percent increase over the prior year amount. It is also a 1.7-percent increase over the partnership's third-quarter 2013 distribution of USD 0.8775 per unit.

CEO Perspective

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

"In the face of the past year's challenges presented by the continued decline in NGL margins and the significant and tragic Geismar incident, we continued to focus on significantly growing our fee-based revenues. This growth was steady throughout 2013 and we expect it to grow even faster in 2014 and 2015 as we deliver on major projects for our customers in a safe and reliable manner. Our distributable cash flow was up 19 percent for 2013 and we expect DCF to grow from approximately USD 800 million to USD 1.2 billion through the 2015 guidance period. As well, we were able to grow our distributions by approximately 9 percent and are reaffirming guidance for annual distribution growth of 6 percent in each of 2014 and 2015.

"Late in 2013, the partnership placed into service a number of important projects and we expect to place into service approximately USD 4.5 billion in projects in 2014 and 2015. We continue growing our gathering and processing operations to meet producer needs in the Northeast while following through on a roster of Transco expansions to serve growing markets along the Eastern Seaboard. In the Gulf of Mexico, we're on schedule to bring into service significant deepwater infrastructure that is well supported by anchor customers and positioned for further upside as the deepwater Gulf of Mexico accelerates.

"We continue to see tremendous appetite for additional firm transportation capacity from a range of industry participants, as evidenced by our fully-contracted Atlantic Sunrise project, and we've identified abundant opportunities to help connect the very best supply basins with the fastest growing markets by building out large-scale, market-integrated infrastructure," Armstrong said.
Northeast G&P

Northeast G&P includes the partnership's midstream gathering and processing business in the Marcellus and Utica shale regions, including Susquehanna Supply Hub and Ohio Valley Midstream, as well as its 51-percent equity investment in Laurel Mountain Midstream, and its 47.5-percent equity investment in Caiman Energy II. Caiman Energy II owns a 50 percent interest in Blue Racer Midstream. This segment is in the early stages of developing large-scale energy infrastructure solutions for the Marcellus and Utica shale regions.

Northeast G&P reported segment loss of USD 24 million for 2013, compared with segment loss of USD 37 million for 2012. For fourth-quarter 2013, Northeast G&P reported segment loss of USD 26 million, compared with segment loss of USD 17 million for fourth-quarter 2012.

For the year, the improved results are primarily due to an increase in fee revenues driven by significantly higher volumes in the Susquehanna Supply Hub and Ohio Valley Midstream businesses and improved Laurel Mountain Midstream equity earnings. For both the year and the fourth quarter, results reflect higher operating costs including depreciation associated with this rapidly growing segment as well as certain settlement resolutions.

Atlantic-Gulf

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

Atlantic-Gulf reported segment profit of USD 614 million for 2013, compared with USD 574 million for 2012. For fourth-quarter 2013, Atlantic-Gulf reported segment profit of USD 166 million, compared with segment profit of USD 158 million for fourth-quarter 2012.

Segment profit for the quarter and the year of 2013 increased primarily due to higher transportation fee revenues associated with expansion projects and new transportation rates effective in 2013 for Transco, as well as lower operating expenses, partially offset by lower NGL margins and reduced equity earnings from Discovery.

West

West includes the partnership's gathering, processing and treating operations in Wyoming, the Piceance Basin and the Four Corners area, as well as the Northwest Pipeline interstate gas pipeline system.

West reported segment profit of USD 741 million for 2013, compared with USD 980 million for 2012. For fourth-quarter 2013, West reported segment profit of USD 186 million, compared with segment profit of USD 207 million for fourth-quarter 2012.

Lower segment profit for the year was due to 42 percent lower NGL margins, including the effects of periods of system-wide ethane rejection and lower per-unit margins. Lower segment profit for the fourth quarter was mostly due to lower volumes as a result reduced ethane recoveries and a customer contract that expired. Decreases for the year in gathering and processing fee revenues were due to severe winter weather causing production freeze-offs in the first quarter as well as declines in production in the Piceance basin and Four Corners areas. Increased natural gas transportation revenues associated with Northwest Pipeline's new rates partially offset these declines.

NGL & Petchem Services

NGL & Petchem Services includes the partnership's energy commodities marketing business, an NGL fractionator and storage facilities near Conway, Kan., a 50-percent interest in Overland Pass Pipeline, and an 83.3 percent interest in an olefins production facility in Geismar, La., along with a refinery grade propylene splitter and pipelines in the Gulf Coast region.

NGL & Petchem Services reported segment profit of USD 275 million for 2013, compared with USD 295 million for 2012. For fourth-quarter 2013, NGL & Petchem reported segment profit of USD 16 million, compared with segment profit of USD 93 million for fourth-quarter 2012.

Segment profit for the year declined USD 20 million primarily due to USD 92 million lower olefin margins resulting from the extended outage of the Geismar plant partially offset by USD 50 million of insurance recoveries related to the Geismar incident and improved marketing margins. Fourth quarter results were significantly impacted by the extended outage of the Geismar plant.